ticon: annual report 2011

Message from the Chairman of the Board

Report of the Audit Committee on Corporate Governance

Financial Highlights

Factory/Warehouse Locations

Social Responsibilities

Board of Directors and Management

General Information

Nature of Business

Risk Factors

Shareholding Structure

Management

Corporate Governance

Internal Control and Internal Audit

Connected Transactions

Management Discussion and Analysis

Statement of Directors’ Responsibilities Concerning the Company’s Financial Report

Financial Statements

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Ready-built FactoRies

logistics WaRehouses

built-to-suit

Value-addedseRVices

CoNTeNTMessage from the Chairman of the Board

Report of the Audit Committee on Corporate Governance

Financial Highlights

Factory/Warehouse Locations

Social Responsibilities

Board of Directors and Management

General Information

Nature of Business

Risk Factors

Shareholding Structure

Management

Corporate Governance

Internal Control and Internal Audit

Connected Transactions

Management Discussion and Analysis

Statement of Directors’ Responsibilities Concerning the Company’s Financial Report

Financial Statements

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66

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147

ANNUALREPORT

2011

4

2011 was an eventful year for TICON and our customers, and generally one which we are glad to

see past, particularly with the dreadful earthquake and tsunami in Japan in March and the Thai

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Factories

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7KH�-DSDQHVH�HDUWKTXDNH�DQG�WVXQDPL�LQ�0DUFK�UHVXOWHG�LQ�PDMRU�GLVUXSWLRQV�WR�WKH�VXSSO\�FKDLQ�JOREDOO\�� DQG� WKH�-DSDQHVH�DXWR�SURGXFHUV� LQ�7KDLODQG�ZHUH�EDGO\�DIIHFWHG�ZLWK� ORVW�SURGXFWLRQ��DV� HVVHQWLDO� FRPSRQHQWV� IURP� -DSDQ�ZHUH� QRW� DYDLODEOH��$V� D� UHVXOW�� D� QHZ�ZDYH� RI� -DSDQHVH�manufacturers decided to move to Thailand in order to replace their damaged factories and resolve

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MeSSAGe FRoM THe CHAIRMAN oF THe BoARD

ANNUALREPORT

2011

5

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Logistic Warehouses

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ANNUALREPORT

2011

6

Investment Activity

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In addition to this March 2012 sale, we are working toward having two further sales during

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Overall Performance

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ANNUALREPORT

2011

7

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Outlook

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ANNUALREPORT

2011

8

RePoRt oF the audit coMMittee oN coRPoRate goVeRNaNce FoR the yeaR 2011

To: The shareholders of TICON Industrial Connection Public Company Limited

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In the year 2011, almost half of the Company’s factories and warehouses and its employees’

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ANNUALREPORT

2011

9

�� 5HYLHZLQJ� WKH� ÀQDQFLDO� VWDWHPHQWV�� 7KH� $XGLW� &RPPLWWHH� KDV� UHYLHZHG� WKH� &RPSDQ\¶V�TXDUWHUO\�DQG�DQQXDO� ¿QDQFLDO� VWDWHPHQWV�RI� �� WR�HQVXUH� WKH� FRUUHFWQHVV�RI� WKH� ¿QDQFLDO�UHSRUW� DQG� WKH� DGHTXDF\� RI� LQIRUPDWLRQ� GLVFORVXUH� E\� TXHVWLRQHG� DQG� OLVWHQHG� H[SODQDWLRQV�IURP�WKH�PDQDJHPHQW�DQG�WKH�H[WHUQDO�DXGLWRUV��7KH�$XGLW�&RPPLWWHH�DJUHHG�ZLWK�WKH�H[WHUQDO�DXGLWRUV� WKDW� WKH� ¿QDQFLDO� VWDWHPHQWV� ZHUH� SUHVHQWHG� LQ� D� FRPSOHWH�� WUXH� DQG� IDLU� PDQQHU�DGKHULQJ�WR�WKH�JHQHUDO�DFFHSWHG�DFFRXQWLQJ�SULQFLSOHV�

�� 5HYLHZLQJ�WKH�RSHUDWLRQ�LQIRUPDWLRQ�DQG�WKH�LQWHUQDO�FRQWURO�V\VWHP� The Committee has

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�� Reviewing the compliance with the Securities and Exchange Acts, Regulations of the

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�� Recruiting the External Auditors as well as determining their remuneration to propose

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ANNUALREPORT

2011

10

� )RU�WKH�\HDU��WKH�$XGLW�&RPPLWWHH�KDV�DSSRLQWHG�0V��5XQJQDSD�/HUWVXZDQNXO��&HUWL¿HG�3XEOLF�$FFRXQWDQW�5HJLVWUDWLRQ�QXPEHU��ZKR�KDV�VHUYHG�DV�WKH�&RPSDQ\¶V�H[WHUQDO�DXGLWRU�IRU� WKH�WKLUG�\HDU��DQG�RU�0U��6RSKRQ�3HUPVLULYDOORS��&HUWL¿HG�3XEOLF�$FFRXQWDQW�5HJLVWUDWLRQ�QXPEHU��DQG�RU�0V��6XPDOHH�5HHZDUDEDQGLWK��&HUWL¿HG�3XEOLF�$FFRXQWDQW�QXPEHU��RI�(UQVW��<RXQJ�2I¿FH�/LPLWHG��WR�VHUYH�DV�WKH�&RPSDQ\¶V�H[WHUQDO�DXGLWRU��ZLWK�WKH�UHPXQHUDWLRQ�RI��%DKW�

�� 5HYLHZLQJ� WKH� LQWHUQDO� DXGLW� The Committee has reviewed the mission, scope of work,

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FINANCIAL HIGHLIGHTS

ANNUALREPORT

2011

11

FINANCIAL HIGHLIGHTS

ANNUALREPORT

2011

12

FACToRIeS AND WAReHouSeS

FactoRies

WaRehouses

FactoRies aNd WaRehouses

TICON Sales to TFUND

Sales to TFUND/TLOGIS

Sales to TFUND/TLOGISTICON

TICON

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ANNUALREPORT

2011

13

FACToRy/WAReHouSe LoCATIoNS

Factories

Warehouses

Port

$LUSRUW

5D\RQJ

Chachoengsao

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6DPXWSUDNDUQ

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Pathumthani

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/DGNUDEDQJ�,QGXVWULDO�(VWDWH

73$5.�/$'.5$%$1*

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ANNUALREPORT

2011

14

SoCIAL ReSpoNSIBILITIeS

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ANNUALREPORT

2011

15

DIReCToRS AND MANAGeMeNTboaRd oF

diRectoRs

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Director/Management:

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Director

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ANNUALREPORT

2011

16

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Director and President

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ANNUALREPORT

2011

17

0U��&KDWFKDYDO�-LDUDYDQRQ'LUHFWRU�DQG�$XGLW�&RPPLWWHH¶V�PHPEHUAge: ��\HDUV

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ANNUALREPORT

2011

18

Mr. Somsak Chaiyaporn

General Manager

Age 60

Education Docteur Ingenieur (Mecanique), Ecole Centrale de LyonShareholding 0.01 percent (as at March 15, 2012)Relationship among Directors/Management - None -Related experience 2001 – Present General Manager, Eco Industrial Services Co., Ltd. (Factories for rent)

Mr. Pornthep Pisalangkul

Assistant General Manager

Age 55

Education Bachelor of Architect, Chulalongkorn UniversityShareholding 0.06 percent (as at March 15, 2012)Relationship among Directors/Management - None -Related experience - None -

Mr. Peerapat Srisukont

Head of Project Development

Age 43

Education Master of Science in Civil Engineering, Texas A&M University, Kingsville Master of Business Administration, Mahidol University International CollegeShareholding - None - (as at March 15, 2012)Relationship among Directors/Management - None -Related experience - None -

Directors anD ManageMentBoard of

MaNaGEMENT

ANNUALREPORT

2011

19

Mr. Somsak Ratanavirakul

Head of Marketing

Age 52

Education Master of Business Administration, Chulalongkorn UniversityShareholding 0.001 percent (as at March 15, 2012)Relationship among Directors/Management - None -Related experience 1996 – 2004 Project Planning Manager, Thai Factory Development Public Co., Ltd. (Property)

Miss Siriporn Sombatwatthana Head of Administration

Age 49

Education Bachelor of Business Administration,Assumption UniversityShareholding 1.85 percent (as at March 15, 2012)Relationship among Directors/Management - None -Related experience - None -

Miss Lalitphant Phiriyaphant

Head of Finance and Company Secretary

Age 46

Education Master of Economics, Thammasat UniversityShareholding 0.01 percent (as at March 15, 2012) Relationship among Director/Management - None -Related experience - None -

Mr. Komkrit Laowakoon

Head of Accounts and IT

Age 38

Education Master of Science (Computer Information System), Assumption University� � � � � � � ��&)2�&HUWL¿FDWLRQ�3URJUDP��)HGHUDWLRQ�RI�$FFRXQWLQJ�3URIHVVLRQVShareholding - None - (as at March 15, 2012)Relationship among Directors/Management - None -Related experience - None -

ANNUALREPORT

2011

20

GENERAL INFORMATION

THE COMPANY

Name TICON Industrial Connection Public Company Limited

Type of business Developing standard factories for rent

Registered number 0107544000051 (Bor Mor Jor 666)

Head office address Suite 1308, 13/1th Floor, Sathorn City Tower, 175 South Sathorn Road,

Thungmahamek, Sathorn, Bangkok, 10120

Tel: (662) 679-6565 Fax : (662) 287-3153

Website www.ticon.co.th

E-mail address [email protected]

Registered capital Baht 1,117,252,920 (as at February 28, 2012)

Paid-up capital Baht 781,005,203 (as at February 28, 2012)

Par value Baht 1 per share

SUBSIDIARIES

Eco Industrial Services Company Limited

Type of business Developing standard factories for rent in Leamchabang Industrial Estate, with

BOI Privileges

Shareholder TICON Industrial Connection Public Co., Ltd. holds 100 percent.

Head office address 49/32 Moo 5, Laemchabang Industrial Estate, Tungsukhla, Sriracha, Chonburi

20230

Tel: (662) 679-6565 Fax: (662) 287-3153

Registered capital Baht 50,000,000 (as at February 28, 2012)

Paid-up capital Baht 50,000,000 (as at February 28, 2012)


TICON Logistics Park Company Limited

Type of business Developing warehouses for rent


Head office address Suite 1308, 13/1th Floor, Sathorn City Tower, 175 South Sathorn Road,

Thungmahamek, Sathorn, Bangkok, 10120

Tel: (662) 679-6565 Fax: (662) 287-3153

Website http://www.ticonlogistics.com

E-mail address [email protected]

Registered capital Baht 2,500,000,000 (as at February 28, 2012)

Paid-up capital Baht 2,500,000,000 (as at February 28, 2012)


ANNUALREPORT

2011

21

Shanghai TICON Investment Management Company Limited

Type of business Fund management


Head office address Rm. A512, Building 4, No.3288, Jinhai Road, Pudong New Area,

Shanghai, China

Registered capital USD 2,000,000 (as at February 28, 2012)

Paid-up capital USD 800,000 (as at February 28, 2012)

OTHER REFERENCE PERSONS

Share registrar Thailand Securities Depository Co.,Ltd.

Capital Market Academy Building

2/7 Moo 4, (North Park Project) Vibhavadi-Rangsit Road

Tung Song Hong, Laksi, Bangkok 10210

Tel: (662) 596-9000 Fax: (662) 832-4994-6

Auditor Miss Rungnapa Lertsuwankul, CPA (Thailand),Registration No. 3516

Ernst & Young office Ltd.

33rd Floor, Lake Ratchada Tower

193/136-137 Ratchadapisek Road, Bangkok 10110

Tel : (662) 264-0777 Fax : (662) 264-0789

ANNUALREPORT

2011

22

NATURE OF BUSINESS

1. SIGNIFICANT DEVELOPMENTS

Demand for factories and warehouses has been increasing substantially since 2010 and

throughout 2011, due to high manufacturing investment, especially in the auto sector. The

Company’s occupancy rate has grown continuously to over 90 percent at the end of 2011.

Demand for the Company’s warehouses in 2011 has almost doubled, as compared to the year

before, resulting in a 100 percent occupancy rate at some points of time. In response to the higher

investment expansion in Thailand, as well as the strong demand in leasing factories/warehouses,

TICON has acquired a number of plots of land in several strategic locations, particularly in the

eastern part of Thailand, where the Company’s factories/warehouses were almost fully leased out

at the end of last year.

In the fourth quarter of last year, TICON’s factories and warehouses located in Ayudhya and

Pathumthani provinces were affected by the flood disaster. TICON’s tenants in such areas could

not operate their business, which resulted in the Company’s loss of rental income in Q4/2011 and

Q1/2012. The Company expects that most of factories to be restored will be back in production

and income-producing within Q1/2012. However, thanks to the additional land acquisitions as

mentioned, TICON has benefited from strong investment demands flowing to the eastern Thailand.

TICON is likely to be affected by the reduction in dividend and management fee from TFUND, due

to flood-affected properties in TFUND’s portfolio.

2. BUSINESS OVERVIEW

The Company is in the business of providing standard factories and logistics warehouses for rent

in industrial estates, industrial park and the other potential locations in Thailand. The factories are

located on the following locations.

ANNUALREPORT

2011

23

Location Province Investment Promotion Zone

Bangpa-In Industrial Estate Ayudhya BOI Zone 2

Hi-Tech Industrial Estate Ayudhya BOI Zone 2

Rojana Industrial Park-Ayudhya Ayudhya BOI Zone 2

Amata Nakorn Industrial Estate Chonburi BOI Zone 2

Laemchabang Industrial Estate Chonburi BOI Zone 3*

Chonburi Industrial Estate (Bowin) Chonburi BOI Zone 2

Pinthong Industrial Estate Chonburi BOI Zone 2

Amata City Industrial Estate Rayong BOI Zone 3*

Bangpoo Industrial Estate Samutprakarn BOI Zone 1

Navanakorn Industrial Promotion Zone Pathumthani BOI Zone 1

Ladkrabang Industrial Estate Bangkok BOI Zone 1

Rojana Industrial Park-Rayong Rayong BOI Zone 3*

* Conveys Zone 3 benefits to companies established on these estates which have applied forbenefits from BOI prior to December 31, 2014, otherwise Zone 2 benefits are to be applied.

The warehouses are located on the following locations.

Location Province Investment Promotion Zone

TICON Logistics Park-Bangna Chachoengsao BOI Zone 1

Laemchabang Logistics Center (2 Locations) Chonburi BOI Zone 2

TICON Logistics Park-Wangnoi (3 Locations) Ayudhya BOI Zone 2

Rojana Industrial Park-Ayudhya Ayudhya BOI Zone 2

Amata Nakorn Industrial Estate Chonburi BOI Zone 2

TICON Logistics Park-Ladkrabang Bangkok BOI Zone 1

Eastern Seaboard Logistics Center (2 Locations) Rayong BOI Zone 3*

TICON Logistics Park-Sriracha Chonburi BOI Zone 2

Chonburi Industrial Estate (Bowin) Chonburi BOI Zone 2

* Conveys Zone 3 benefits to companies established on these estates which have applied forbenefits from BOI prior to December 31, 2014, otherwise Zone 2 benefits are to be applied.

TICON has two subsidiaries named Eco Industrial Services Co., Ltd. (“EISCO”), TICON Logistics

Park Co., Ltd. (“TPARK”) and Shanghai TICON Investment Management Company Limited.

TICON and EISCO are providers of standard factories while TPARK provides logistics

warehouses. Shanghai TICON Investment Management Co., Ltd. was established for exploring

new business in China. Details of the Subsidiaries are as follows.

ANNUALREPORT

2011

24

1. Eco Industrial Services Co., Ltd. (“EISCO”)

TICON holds a 100 percent stake in EISCO. The objective of establishing EISCO was to

benefit from the Board of Investment’s Privileges in relation to developing a phase of standard

factory buildings on Laemchabang Industrial Estate, in a similar manner to TICON itself.

EISCO commenced its operation in April 2001 and was granted BOI Privileges in August

2001.

As of February 28, 2012, EISCO had registered and paid-up capital of Baht 50 million.

In 2003, EISCO was granted ISO 9001:2000 certification.

2. TICON Logistics Park Co., Ltd. (“TPARK”)

TICON has a 100 percent stake in TPARK. TPARK was established in August 2005 for the

purpose of developing logistics warehouses for rent. TPARK was granted BOI Privileges in

relation to development of TPARK-Bangna, TPARK-Wangnoi and the development of a

warehouse in Rojana Industrial Park-Ayudhya and Amata Nakorn Industrial Estate.

As of February 28, 2012, TPARK had registered and paid-up capital of Baht 2,500 million.

In 2009, TPARK was granted ISO 9001:2008 certification.

3. Shanghai TICON Investment Management Company Limited (“SH-TICON”)

TICON has a 100 percent stake in SH-TICON. It was registered in China in July 2010 for

exploring business in China. Currently is in progress of business feasibilities studying.

As of February 28, 2012, SH-TICON had registered capital of 2 million USD, and paid-up

capital of 0.8 million USD.

TICON has also invested in two Associated Companies, TICON Property Fund and TPARK

Logistics Property Fund, details of which are as follows.

TICON Property Fund (“TFUND”)

TFUND, a listed mutual fund on the Stock Exchange of Thailand, was established in April 2005 for

the purpose of investment in industrial properties owned by TICON and/or other developers. BBL

Asset Management Company Limited was appointed as the fund manager.

Presently, TFUND has capital from the unit holders of Baht 9,487 million. TFUND raised capital for

the first time in 2005, following with another four rounds of capital raising in 2006-2008 and 2010.

The proceeds were used to acquire 201 factories (usable area totaling 463,760 square metres)

ANNUALREPORT

2011

25

and 8 warehouses (usable area totaling 19,600 square metres) from TICON and TPARK,

respectively. TICON and TPARK are not subject to any obligation to buy back these properties.

TICON and TPARK were selected as the property managers for all of the factories and

warehouses sold to TFUND. TICON and TPARK are entitled to property management fees from

TFUND.

TFUND has a policy to pay dividends of not less than 90 percent of net profit, which is not subject

to corporate income tax. The payment will be made at least twice a year. As at December 31,

2011, the NAV of TFUND was Baht 10.6310 per unit.

At the end of December 2011, TICON held 28.02 percent of TFUND’s total issued units.

TPARK Logistics Property Fund (“TLOGIS”)

TLOGIS, a listed mutual fund on the Stock Exchange of Thailand, was established in November

2009 for the purpose of investment in industrial properties owned by TICON/TPARK and/or other

developers. As well as TFUND, BBL Asset Management Company Limited was appointed as the

fund manager.

Presently, TLOGIS has capital from the unit holders of Baht 2,468 million. TLOGIS raised capital

for the first time in 2009. It did another capital raising in 2011. Most of its capital was used to

acquire 28 warehouses (usable area totaling 125,961 square metres) from TPARK. The fund’s

income of Baht per year 187.5 million has been guaranteed by TICON until December 31, 2016.

TPARK are not subject to any obligation to buy back these properties.

TICON was selected as the property manager for TLOGIS’s properties mentioned above.

A profit sharing has been paid to TICON as a property management fees.

TLOGIS has a policy to pay dividends of not less than 90 percent of net profit of TLOGIS, which is

not subject to corporate income tax. The payment will be made at least twice a year. As at

December 31, 2011, the NAV of TLOGIS was Baht 10.8012 per unit.

At the end of December 2011, TICON held a 20.43 percent of TLOGIS’s total issued units.

The sales of properties to TFUND and TLOGIS provide another source of fund for the Company’s

business expansion, in addition to funds from operating activities and various credit facilities.

Decisions as to whether to sell properties to TFUND or TLOGIS will be made by considering

relevant factors periodically, in order to maximize shareholder value. The Company plans to raise

funds through TFUND and TLOGIS continuously. This will help provide TICON with another

alternative in management of its capital structure.

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2011

26

TICON has invested in a Related Company, Bangkok Club Co., Ltd., amounting to Baht 256,500

in which TICON holds only 0.11 percent stake, for the purpose of using its facilities.

3. PRODUCTS AND SERVICES

3.1 Products

a. Standard factories

TICON was established to provide international standard factories for international

companies who do not particularly want to develop their own factories, nor even to own

them, in order to reduce their operating cost and risks related to any possible

uncertainties. TICON chooses good locations and develops factories of a standard

design to suit most manufacturing processes. As more than 90 percent of the Company’s

tenants are international manufacturers, TICON provides customers with other services

in regard to commencing their production in Thailand.

The locations in which TICON develops factories are determined by customer demand,

now and in the foreseeable future. Accessibility to ports, airports and Bangkok are very

relevant in this respect, as are the BOI investment zones, as well as a good standard of

estate infrastructure.

The Company has developed factories in Export Processing Zone’s (“EPZ”) and General

Industrial Zone’s (“GIZ”), following customers’ demand, which will be different in each

location. Demand on Laemchabang Industrial Estate, for example, being adjacent to

Thailand’s major deep sea port, tends to be for factories in the EPZ.

The factories developed by TICON and EISCO are all single-storey with mezzanine

offices, constructed on their own fenced and landscaped sites, complete with guard

house, parking area and loading area. They are of a standard design, albeit modified to

suit the customers' requirements. Factory sizes range from 1,000 to 6,000 square

metres, with an average size range from 2,000 to 3,000 square metres. The factories'

floor loading capacities are in the range of 1 to 3 tons per square metre. The buildings

are of steel portal frame construction, to give maximum usable area unobstructed by

structural columns.

In addition to the standard factories, custom-developed factories are developed

according to tenants’ individual requirement, and will generally tend to be larger than

standard factories.

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2011

27

Lease agreements normally have a term of 3 years. TICON offers options to renew the

lease. Moreover, the Company also offers options to exchange the unit for one of

a different size or location, and even options to buy the factory.

Tenants are required to pay a cash deposit equivalent to 3-6 months rent.

At the end of 2009, 2010 and 2011, TICON’s factory portfolio are as follows:

End of 2009 End of 2010 End of 2011

No. offactory(Unit)

Buildingarea(Sq M.)

No. offactory(Unit)

Buildingarea(Sq M.)

No. offactory(Unit)

Buildingarea(Sq M.)

Leased

Pre-leased

Available

Under construction

Under site preparation

115

9

41

10

61

324,550

17,650

104,425

27,700

141,875

101

8

28

11

68

296,825

23,850

71,015

25,000

164,950

137

6

10

15

56

387,515

15,900

31,800

38,245

144,239

Total 236 616,200 216 581,640 224 617,699

The portfolio details contained in the previous table are thoui89 se after sales to TFUND.

Over the past three years the Company had sold factory to TFUND as follows:

2009 2010 2011

No. offactory(Unit)

Buildingarea(Sq M.)

No. offactory(Unit)

Buildingarea(Sq M.)

No. offactory(Unit)

Buildingarea(Sq M.)

Sold to Property Fund - - 36 87,435 - -

The average occupancy rate has increased continuously over the past 2 years, to the

normal level at above 80 percent, as shown in the table below, due to the increase in

investment in Thailand.

2009 2010 2011

Average occupancy rate (%) 73 81 88

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2011

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At the end of 2011, TICON’s customers are in a variety of industries and are also varied

by nationality, as indicated in the table below:

Note : The percentages were calculated based on rental and services income received inDecember 2011.

b. Warehouses

Development warehouses with international standards is undertaken by TICON Logistics

Park Co., Ltd., (TPARK), one of the Company’s subsidiaries.

Logistics is the essential activity for the distribution of materials, parts, finished goods

and other produce. Distributors, whether they be the principal operators themselves or

logistic service providers, will normally be capital-lean in their logistics operation, and will

therefore prefer to lease warehouse facilities. This has created good demand for modern

logistics parks and warehouses which the Company seeks to supply through TPARK.

The Company’s warehouses are located in strategic locations, suitable for being a

distribution center. The warehouses are designed to suit modern logistics management

systems. Typical specifications are good clear heights, wide column spans, dock

levelers, and high floor loading capacities.

As with factories, we offer warehouses on a built-to-suit basis, as well as providing

speculatively-developed standard buildings. We also offer a sale and leaseback option.

Lease agreements normally have a term of 3 years. The Company offers options to

renew the lease. Tenants are required to pay a cash deposit equivalent to 3-6 months

rent.

Industry % Country %

1. Electronics and electrical

2. Auto parts

3. Foods

4. Agricultural machinery

5. Plastic

6. Others (e.g. Metal, Fashion, etc.)

42.3

26.5

5.6

4.7

2.7

18.2

1. Japan

2. Europe

3. Singapore

4. Canada

5. Thailand

6. Others (e.g. United State, Korea,

etc.)

61.1

15.0

8.6

5.8

5.0

4.5

Total 100.0 Total 100.0

ANNUALREPORT

2011

29

At the end of 2009, 2010 and 2011, TPARK’s warehouse portfolio are as follows:

End of 2009 End of 2010 End of 2011

No. ofwarehouse(Unit)

Buildingarea

(Sq M.)


Buildingarea

(Sq M.)


Buildingarea(Sq M.)

Leased

Pre-leased

Available

Under construction

Under site preparation

15

2

12

17

32

61,580

15,180

50,540

50,118

137,058

27

6

13

11

35

103,370

52,330

64,904

27,550

127,718

52

4

1

49

96

205,352

33,481

8,450

157,186

769,976

Total 78 314,476 92 375,872 202 1,174,445

The portfolio details contained in the previous table are those after sales to

TFUND/TLOGIS. However, over the past three years the Company had sold factory to

TFUND/TLOGIS as follows:

2009 2010 2011


Buildingarea

(Sq M.)


Buildingarea

(Sq M.)


Buildingarea(Sq M.)

Sold to Property Fund 15 70,731 - - 13 55,230

At the end of 2011, the Company’s net leased warehouses increased almost two times,

as compare to the previous year due to the increase in investment in Thailand and the

Company’s location diversification, to serve several demands. The average occupancy

rate in 2011, therefore, obviously higher than the previous year’s.

2009 2010 2011

Average occupancy rate (%) 76 72 88

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At the end of 2011, TPARK’s customers are in a variety of industries and are also varied

by nationality, as indicated in the table below: cu variety of industries and are also varied

Note : The percentages were calculated based on rental and services income received inDecember 2011.

3.2 Services

Services provided by the Company include:

� Modifications

With an in-house design, project management and construction capability, the Company

is well positioned to assist customers in designing and carrying out modifications to the

standard specification of the building to suit their particular needs.

� Utilities Connections

The Company assists industrial customers in securing utility services at the customers’

required capacity.

� Assistance with Consents and Permits

The Company assists industrial customers obtaining the various statutory consents

necessary to commence manufacturing operations swiftly such as operation permit.

Moreover, should the customers need Work Permits for any of their expatriate staffs, the

Company will obtain these for them.

Industry % Country %

1. Auto parts

2. Electronics and electrical

3. General Logistics

4. Wholesaler/Retailers

5. Consumer product

6. Food

7. Others

38.5

18.9

10.6

9.0

8.6

7.9

6.5

1. Japan

2. Germany

3. Netherlands

4. France

5. Thailand

6. China

7. Others (e.g. United State, Korea, etc.)

39.1

20.9

9.0

8.6

8.5

3.6

10.3

0.001latoT0.001latoT

ANNUALREPORT

2011

31

x Others Services

In addition to the above, the Company will seek to assist the customers in any particular

needs where it is able to provide assistance, such as suggesting suppliers of goods and

services, and assistance in recruiting key personnel.

4. REVENUE STRUCTURE

Presently, income from sales of properties to associated companies has become the biggest

portion of total revenues due to substantial sales of factories/warehouses to TFUND/TLOGIS each

year. However, since the Company’s main business is to provide factories/warehouses for rent,

the rental and service income still play an important role.

Both incomes combined contributed approximately 80-90 percent of the Company’s total

revenues. The Company also has other sources of income which are of portions varying each

year. Please see the analysis of change in revenue structure in “Management discussion and

analysis”.

Revenue structure2009 2010 2011

Baht mil. % Baht mil. % Baht mil. %

Sales of properties to TFUND/TLOGIS

Rental and service income

Sales of properties to tenants

Properties management fee from

TFUND/TLOGIS

Share of profit from investment in

TFUND/TLOGIS

Realised additional gain on sales of

properties to TFUND/TLOGIS

Other income

1,530.00

809.23

-

77.73

158.67

-

42.53

58.44

30.91

-

2.97

6.06

-

1.62

1,737.75

850.87

157,18

107.49

168.59

38.90

80.16

55.33

27.09

5.00

3.42

5.37

1.24

2.55

943.50

880.23

132.97

113.44

160.80

3.52

61.25

41.10

38.34

5.79

4.94

7.01

0.15

2.67

Total 2,618.16 100.00 3,140.94 100.00 2,295.71 100.00

5. VISION

The Company’s vision is to be the leading company in developing and providing rental services of

quality industrial properties with international standards by taking into account the social and

environmental impacts, as well as maximizing returns to the investors

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6. OBJECTIVES

The Company’s objective is to maintain its position as the leader in providing standard factories

and warehouses of international standard for rent, coupled with associated services, according to

tenants’ demand. Management with good corporate governance for the benefits of all stake

holders is also the Company’s objective.

7. INDUSTRY AND COMPETITION

7.1 Concept, demand/supply, and competition

7.1.1 Standard factories for rent

a. The concept of serviced factories

Industrial property development in Thailand is primarily involved with developing

industrial estates, providing the estate infrastructure, and selling plots of land for

the industrial users to construct their own factories.

The manufacturers might either allocate their capital to build their own factories

or lease in order to reduce their operating capital and risks related to any

possible uncertainties. To lease factories with associated services becomes

attractive for international manufacturers who want to run operation in Thailand

with no ownership in properties.

b. Supply

The developers who provide factory buildings for sale/rent can be classified into

two types which are;

¾ Industrial estates/parks developers who develop factory buildings on their

own industrial land; and

¾ Other developers who develop factory buildings on land purchased or

leased from the industrial land developers. The Company and its Subsidiary

are this kind of developer.

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c. Demand

Many foreign manufacturers do not want to develop their own factories, in order

to reduce their project capital and increase flexibility, especially in uncertain

times. Shortening product life cycles and more investor focus on return on capital

have added to the appeal of renting in the eyes of modern international industry.

Thailand is a good location for manufacturing investment as a result of its central

position of Asia. Moreover, there is a skilled labor force, and a good level of

physical and regulatory infrastructure, as well as beneficial regulations. The

growth of foreign direct investment in Thailand increases demands on factories

for rent.

d. Competition

At the present, there are few players in standard factory for rent market. Besides

TICON, there are Thai Factory Development Public Co., Ltd., Hemraj Land and

Development Public Co., Ltd., Amata Summit Ready Build Co., Ltd., and

Pinthong Industrial Park Co., Ltd.

However, only TICON has concentrated on development of factories for rent.

TICON’s competitive advantages are its sole focus on providing factories and

warehouses for rent, the multiple locations they can offer, the services they have

developed to assist its customers. Moreover, the Company’s 20 years of

experience in this business and a share of more than 60 percent of the

ready-built factory market resulted in the benefits of economies of scale.

7.1.2 Warehouses for rent

a. The concept of warehouses

In Thailand, the cost of logistics management is currently high as compare with

other countries, which restricts the country’s competitiveness. Improving the

effectiveness of logistics management will result in lower supply chain costs,

which eventually reduces prices of goods and services. In addition, an efficient

logistics infrastructure will encourage foreign direct investment.

Warehouses play an important role in the logistics system. International standard

warehouses will improve efficiency of the entire logistics system.

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2011

34

There has been substantial increase in the number of logistics service providers.

The logistics service providers, who have specific areas of expertise, have

played important roles in logistics management business. Many producers,

wholesalers and retailers, and manufacturers tend to outsource their logistics

management instead of setting up their own related functions.

However, the principal businesses and the logistics service providers normally

have a policy not to own their warehouses. Seeking returns on real estate is not

their main business operation. The logistics service providers tend to limit their

investment to essential assets which enhance the company’s competitiveness,

including vehicles, equipment and information technology systems, as well as

training personnel. Investment in real estate, especially without expertise, incurs

fixed costs for a long time which will increase risk in the event that their

customers terminate contracts. For these reasons, the logistics management

industry looks to the real estate sector to provide logistics warehouses for rent.

b. Supply

Presently, logistics warehouses are mainly concentrated outside Bangkok and

surrounding areas. Many of the warehouses are located on the Asia Highway,

Bangna-Trad Road and Rama II Road. Most of these warehouses were not

designed for modern distribution systems. In addition, proper infrastructure has

not been provided to support logistics management operation. Besides, many of

the warehouses are located in residential and mixed use areas which cause

problems in terms of safety, congestion and pollution.

c. Demand

Demand for logistics warehouses are from the following sources.

1. Logistics service providers, most of which are multinational companies

which have expertise in logistics management with software and modern

management systems. The logistics service providers tend to lease

warehouses rather than owning them.

2. Operators who are involved in international distribution centres, international

procurement offices and modern distribution centres.

3. Manufacturers and major retailers who need distribution centers for the

distribution of their goods to their customers in Bangkok and other regions

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2011

35

4. Exporters and importers who are interested in warehouses located near an

airport or seaport, especially in a duty free zone

5. Logistics supporting businesses including transportation service provider,

packaging service providers, value added creation providers (quality

inspection, label sticking, maintenance, assembly/packing), truck

maintenance providers, providers of temporary workers and carriers.

d. Competition

Presently, there are few providers of high quality warehouses in good locations.

Most available warehouses are of low quality and are in poor locations, as

mentioned above. The Company has an advantage over other warehouses

providers since its logistics warehouses projects are in good locations. The

quality of the warehouses, as well as the supporting infrastructure, are all of good

quality and of international standard.

7.2 Competition strategies for factories and warehouses

x Market positioning

According to a survey by CB Richard Ellis (Thailand) Co., Ltd., at the end of Q3/2011,

TICON had a total market share of 64 percent of the standard factories for rent market

under management (of which 34 percent were TFUND’s properties).

TICON has positioned itself as the major provider of factories for rent in Thailand. It is the

Company’s intention to retain and enhance this position by increasing the scale of

activities, thereby increasing the customer base, and benefiting from further economies

of scale and increasing returns.

The intended market position for the Company’s high quality logistics warehouses for

rent is the same as for factories for rent, which is to be the major provider.

x Target market

The target market for leased factory is component suppliers to large end product

manufacturers. However, the Company also seeks to custom-build for larger

manufacturers.

The target markets for leased warehouses are producers, wholesalers, retailers and

manufacturers, together with their logistic service providers.

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2011

36

x Pricing

The level of rents the Company charges are more related to the cost of providing the

facilities than the rents competitors charge. The Company will, however, continue to

monitor the market to ensure that its rents are competitive, and that the standard of its

factories and services provided are superior.

x Promotion

The Company’s principal marketing activities involve direct approaches to potential

customers, and regular contact with a number of intermediaries, such as major

manufacturers (to accommodate their suppliers), Thai government agencies, foreign

embassies, Trade Missions, Chambers of Commerce, industrial estate developers, real

estate brokers and other intermediaries.

Marketing material includes the production of brochures, press advertising, an internet

website, signboards on all construction sites, billboards at expressway locations, and

selective mailing.

More proactive measures, such as participation in seminars, exhibitions and other

relevant meetings, both domestically and overseas, take place from time to time when

appropriate.

7.3 Industry outlook and future competition

7.3.1 Industry outlook

Demand for factories and warehouses on lease has continued to increase, following

the global economic recovery since late 2009, particularly with investment relocation

into Asian countries. In addition, the benefits to manufacturers of not having to invest

in fixed assets, but only in income-producing assets, will help support the demands

for leasing.

7.3.2 Competition

New competitors would have a high capital requirement, and would need

considerable time to develop factories with the locational, size and type diversification

comparable to the range TICON offers, as well as to develop the support services

currently provided by TICON.

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2011

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8. PRODUCTION

The Company builds its factories/warehouses on potential plots of land by its own design and

construction team. With its own team, the Company has a flexibility in managing construction and

can control the construction cost.

The main construction materials are steel and concrete. The Company is able to procure

construction materials of the same quality and price from several vendors.

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2011

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RISK FACTORS

1. RISK RELATED TO LEASE AGREEMENT CONSIDERED AS A SHORT-TERM

With regard to the Company's lease contracts mostly of 3 years term, with options to renew,

investors may be concerned about the customers' decisions on renewing the contracts.

However, once the tenants are in production in the factory, they will not tend to vacate it unless

there is good reason to do so. For this reason, the normal lease renewal rate is in excess of 80

percent.

The diversification of the Company's locations, as well as the customers' nationality and type of

business, helps reduce risk in relation to contract termination. Moreover, the factories/warehouses

are of standard design in popular estates and leasing out factories/warehouses where leases are

not renewed does not tend to be difficult.

2. RISK RELATED TO FACTORIES/WAREHOUSES LOCATED IN FLOOD-RISK AREA

In Q4/2011, the Company was affected by the floods in Ayudhya and Pathumthani provinces. Its

factories/warehouses located in such areas were damaged, following by the Company’s loss of a

certain amount of rent. Investor may be concerned that there might be a possibility of floods in the

future.

TICON has insured its properties, with cover including physical damages and business

interruption, to reduce impacts from the floods, if any. However, with its location diversification and

majority of properties in eastern Thailand, the Company is able to serve new demands, as well as

demands moving from flooded area to other areas considered secure. In addition, concrete dikes

are being constructed by industrial estate/park developers in the flooded areas, and by the

Company on its logistics park. The dikes are expected to be finished by September 2012, and

could be able to protect the properties in such areas.

The broadening of last year flood impacts has led the government to seriously improve water

management. The Company believes that the possibility of a repeat of serious flooding is minimal.

ANNUALREPORT

2011

39

3. RISK RELATED TO COMPETITION OF INDUSTRIAL ESTATE DEVELOPERS

At present, there are some industrial estate developers building factories for rent/sale. However,

those developers have developed factories for rent on their own estates while the Company’s

portfolio is diversified in 12 various locations. Moreover, with its own construction team and long

experience in this business, the Company has had advantages in serving tenants’ demands as

well as providing after-sale service to tenants. The Company also has economies of scale due to

its large portfolio.

4. RISK RELATED TO A DILUTION EFFECT FROM THE EXERCISE OFTICON-W3

In February, 2009, TICON offered 219,353,636 warrants to its existing shareholders

(“TICON-W3”). The exercise ratio is 1.03331 shares for 1 warrant, at the exercise price of Baht

19.355 per share. As at January 6, 2011, 219,349,803 warrants remain unexercised.

If all warrant holders exercise their rights and convert such warrants into ordinary shares, the

Company’s shareholders might be affected by dilutions of the share value and percentage of

shareholding, as follows:

Before full exercise of TICON-W3 (as at December 31, 2011)

serahs302,500,187serahspu-diapforebmuN

%001gnidloherahsfoegatnecreP

After full exercise of TICON-W3

serahs745,166,700,1serahspu-diapforebmuN

%15.77gnidloherahsfoegatnecreP

%94.22gnidloherahsfonoituliD

5. RISK RELATED TO A DILUTION EFFECT FROM THE EXERCISE OFTICON-W5

In May, 2009, TICON offered 32,883,000 warrants to its directors and selected employees

(“TICON-W5”). 1 warrant is exercisable for 1.02905 ordinary shares, at a price of Baht 7.774 per

share. The first exercise date is June 29, 2012.

If all warrant holders exercise their rights and convert such warrants into ordinary shares, the

Company’s shareholders might be affected by dilutions of the share value and percentage of

shareholding, as follows:

ANNUALREPORT

2011

40

Before full exercise of TICON-W5 (as at December 31, 2011)


%001gnidloherahsfoegatnecreP

After full exercise of TICON-W5


%58.59gnidloherahsfoegatnecreP

%51.4gnidloherahsfonoituliD

6. RISK RELATED TO THE ADJUSTMENT OF THE EXERCISE PRICE AND EXERCISERATIO OF TICON-W3, TICON-W4 AND TICON-W5

In the event that, in the future, the Company offers the existing shareholders and/or the general

public any new securities which give rights to the holders to purchase or convert such securities

into the Company's ordinary shares, the adjustment of the exercise price and exercise ratio of

TICON-W3 and TICON-W5, in accordance with the conditions mentioned in the Company's

prospectus, might not completely compensate for lower benefits of the warrant holders. Such lower

benefits may occur because the adjustment formula is concerned only with the intrinsic value of

the warrants while the time value has not been taken into account.

7. RISK RELATED TO RELIANCE ON PARTICULAR BUSINESS SECTORS ANDNATIONALITIES OF TENANTS

At the end of 2011, 61 percent of the Company’s tenants were manufacturers from Japan, and 42

percent of the tenants were in the electronics/electrical sectors. The Company might be affected

from the slowdown of electronics/electrical sectors, or direct investment from Japan.

Anyhow, the customer in the electronic part segment is comprised of diversity of different business

area which is not directly related for example Hard disk drive segment/ general electronic

manufacturing service.

According to the investor from Japan, Thailand still is the first choice in Southeast Asia, hence risk

relate to only investor from Japan is in tolerance area.

Moreover, the standard type of factories can help serve the demands of various customers

ANNUALREPORT

2011

41

8. RISK RELATED TO ABILITY TO LEASE OUT FACTORIES/WAREHOUSES INDEVELOPMENT PLAN

At the end of 2011, the Company had 56 factories and 96 warehouses under development plan.

The Company might have to carry the development cost even if such factories and warehouses

cannot be leased out.

The Company believes that the risk can be controlled. The Company intends to maintain only

a few available factories/warehouses in each location. In the event that the numbers of available

factories/warehouses exceeds what is required, the construction will be slowed down. With its own

construction team, the Company can manage construction effectively, including speed and

flexibility, to transfer workers to other active locations.

9. RISK RELATED TO OBJECTION FROM THAILAND EQUITY FUND IN ISSUINGSECURITIES TO EXISTING SHAREHOLDERS WITH COST

In the event that the Company has a plan to issue any new securities for existing shareholders

with cost and Thailand Equity Fund (“TEF”) disagree with the plan, Mr. Chali Sophonpanich,

Mr. Direk Vinichbutr, and Mr. Wei Cheng Kuan will object to such plan and will try their best to

convince other major shareholders, i.e. City Villa Co., Ltd., Sathorn City Tower Property Fund,

Riverside Garden Marina Co., Ltd., and Rojana Industrial Park Public Co., Ltd. to follow their

decisions, according to the Shareholders’ Agreement with TEF.

In this regard, the Company believes that as long as the plan benefits the shareholders, TEF will

support the Company’s decision as usual.

ANNUALREPORT

2011

42

SHAREHOLDING STRUCTURE

The Company has a policy of paying cash dividend of not less than 40 per cent of net profit after taxation;

however, whether the Company will pay dividends and the amount thereof will depend upon the

Company’s results, financial condition and cash requirements and other relevant factors. At the present

there is no dividend payments restriction under loan agreement between the Company and financial

institutions.

ShareholdersAs of March 15, 2012

No. of Shares %

1. Rojana Industrial Park Group

Rojana Industrial Park Public Co., Ltd.

Mr. Direk Vinichbutr166,736,672

1,169,424

21.35

0.15

167,906,096 21.502. City Realty Group

City Villa Co., Ltd.

Mrs. Siriya Sophonpanich

City Realty Co., Ltd.

Mr. Chali Sophonpanich

28,569,000

5,375,782

1,913,100

14,379,400

3.66

0.69

0.24

1.84

50,237,282 6.433. Directors/Managements/Related persons

Mrs. Yupadee Kuan and Mr. Manopath Kuan (President’s spouse and son)

Miss Siriporn Sombatwatthana (Head of Administration) and spouse

Mr. Virapan Pulges (Managing Director) and spouse

Mr. Threekwan Bunnag (Director and Audit Committee’s member) and spouse

Mr. David Desmond Tarrant (Director and Chairman of the Audit Committee)

Mr. Somsak Chaiyaporn (General Manager)

Miss Lalitphant Phiriyaphant (Head of Finance and Company Secretary)

Mr. Somsak Ratanavirakul (Head of Marketing)

33,000,000

14,420,000

6,856,406

1,685,957

458,589

101,746

44,068

12,832

4.22

1.85

0.88

0.22

0.06

0.01

0.01

0.00

56,579,598 7.25

4. Thai N.V.D.R Limited

5. Mr. Pracha Kijworametha

6. Mrs. Suchada Leesawattrakul

7. Nortrust Nominees Ltd.

8. Miss Jutharat Saekoo

9. Phatra Capital Public Co., Ltd.

10. State Street Bank Europe Ltd.

11. Others

74,273,601

43,200,775

25,364,800

24,858,800

18,028,878

16,900,600

14,530,987

289,123,786

9.51

5.53

3.25

3.18

2.31

2.16

1.86

37.02

Total 781,005,203 100.00

ANNUALREPORT

2011

43

MANAGEMENT

1.MANAGEMENTSTRUCTUREAS

OF31DECEMBER

2011

BoardofDirectors

President

(Mr.WeiChengKuan)

ManagingDirector

(Mr.VirapanPulges)

HeadofProject

Development

(Mr.PeerapatSrisukont)

HeadofMarketing

(Mr.SomsakRatanavirakul)

Headof

Administration

(Ms.SiripornSombatwatthana)

HeadofFinance

(Ms.LalitphantPhiriyaphant)

HeadofAccounts

andIT

(Mr.KomkritLaowakoon)

AuditCommittee

InternalAuditor

(Ms.WutineePituksang)

GeneralManager

(Dr.SomsakChaiyaporn)

ExecutiveCommittee

CompensationCommittee

HeadofInvestment

(Mr.VirapanPulges)

(Acting)

InvestorRelations

(Ms.LalitphantPhiriyaphant)

NominationCommittee

AssistantGeneralManager

(Mr.PornthepPisalangkul)

ANNUALREPORT

2011

44

The Company has one Board of Directors and four Sub-Committees, comprising the Executive

Committee, the Audit Committee, the Compensation Committee and the Nomination Committee.

1.1 BOARD OF DIRECTORS

The Company’s Board of Directors consists of eight members as follows:

1. Mr. Chali Sophonpanich Chairman of the Board

2. Mr. Direk Vinichbutr Director

3. Mr. Jirapongs Vinichbutr Director

4. Mr. Wei Cheng Kuan Director

5. Mr. Virapan Pulges Managing Director

6. Mr. David Desmond Tarrant Chairman of the Audit Committee

7. Mr. Chatchaval Jiaravanon Audit Committee’s member

8. Mr. Threekwan Bunnag Audit Committee’s member

The authorised directors are Mr. Chali Sophonpanich, Mr. Direk Vinichbutr, Mr. Jirapongs

Vinichbutr, Mr. Virapan Pulges, and Mr. Wei Cheng Kuan, any two out of five may sign

documents with the Company’s seal affixed.

Mr. Chali Sophonpanich represents City Realty Group, Mr. Direk Vinichbutr and

Mr. Jirapongs Vinichbutr represent Rojana.

Roles, duties and responsibilities of the Board of Directors

1. New directors should attend orientation classes regarding business operations of the

Company.

2. Conduct their duties in compliance with all laws, objectives and the Articles of

Association of the Company, as well as resolutions of the shareholders’ meetings with

honesty and integrity and carefully safeguard the benefits of the Company to ensure

fair accountability towards all shareholders.

3. Formulate policies and directions of the Company’s operations, and also monitor and

supervise the management team to function in accordance with such policies and

regulations with efficiency and effectiveness, under the principles of Good Corporate

Governance, to maximize economic value and shareholders’ wealth.

4. Report the Company’s performance to shareholders’ meetings and via the Company’s

annual report.

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2011

45

5. Arrange effective and reliable accounting systems, financial report, internal control and

internal audit systems.

6. Review the Company’s Good Corporate Governance Policy constantly.

7. Ensure that the management team treats all stakeholders with ethics and equitability.

8. Independent and other external directors are capable to use their judgment with an

independent opinion in determining matters such as setting out strategies, operational

tactics, resource utilization, nomination of directors, including setting up performance

standard of the Company. They also have to be ready to oppose any acts of other

directors or the management on the issues affecting the equity of shareholders.

9. Seek professional opinions from external to make comments or give advice on the

Company’s operations with the Company’s expense as necessary.

10. Appoint the Company Secretary to take care of the Board’s and the Company’s

activities such as the Board of Directors’ meeting and the shareholders’ meeting, also

assist the directors and the Company in performing their duties as required by laws and

related rules and regulations from time to time. Moreover, the Company Secretary is

accountable for supporting the directors and the Company in disclosing all information

accurately, completely, transparently, and providing in a timely manner.

11. Directors shall refrain from securities trading during periods when they are in

possession of material information not yet disclosed to the public, which might affect

the share price. Directors shall also not disclose such information to outsiders.

Directors are aware of the penalties regarding misuse of such information.

12. Report and update the “Report on the interest of Director and Executive” to the

Company, in compliance with the Company’s criteria.

Appointment of the Board members

The candidates of the Board’s members are nominated by the Nomination Committee. The

appointment is subject to the Articles of Association, which are in compliance with the Public

Limited Company Act, the terms of which are as follows:

1. In the case of appointing a Director to replace a retiring Director, or appointing an

additional director, a resolution from a shareholders' meeting is required. The said

appointment takes place under the following procedures:

a) Each shareholder has one vote per share

ANNUALREPORT

2011

46

b) Each shareholder may exercise his/her voting right pursuant to a) to elect one or

more candidates as Director(s) but may not allot his/her votes to any such

candidate unequally.

c) Candidates who receive the largest numbers of votes shall be elected as

Directors until the vacancies are filled. Where there is a tie among the

candidates, the chairman of the meeting is entitled to a casting vote.

2. Where a Director vacates office for reasons other than retirement, the Board of

Directors will appoint a qualified person as a replacing director.

1.2 EXECUTIVE COMMITTEE

The Company’s Executive Committee consists of five members, as follows:

1. Mr. Wei Cheng Kuan Chairman of the Committee

2. Mr. Virapan Pulges Vice Chairman of the Committee

3. Mr. Chali Sophonpanich Committee’s member

4. Mr. Jirapongs Vinichbutr Committee’s member

5. Dr. Somsak Chaiyaporn Committee’s member and Secretary to the Committee

Roles, duties and responsibilities of the Executive Committee

1. Undertake action assigned by the Board.

2. Strictly comply with laws, objectives, rules and regulations of the Company.

1.3 AUDIT COMMITTEE

The Company’s Audit Committee consists of three members, as follows:

1. Mr. David Desmond Tarrant Chairman of the Committee/Independent Director

2. Mr. Chatchaval Jiaravanon Committee’s member/Independent Director

3. Mr. Threekwan Bunnag Committee’s member/Independent Director

All members of the Audit Committee have knowledge and experience in accounting to

review the financial report process to ensure the reliability.

Roles, duties and responsibilities of the Audit Committee

1. Review the accuracy and adequacy of the Company’s financial reports.

ANNUALREPORT

2011

47

2. Ensure that the Company has suitable and efficient internal control system, internal

audit and the risk management system.

3. Consider, select, nominate and evaluate the Internal Audit Manager as well as an

independence of the Internal Audit Department.

4. Review the Company’s compliance with the Securities and Exchange Act, the Stock

Exchange of Thailand’s regulations, and the laws relating to the Company’s business.

5. Consider the connected transactions, or the transactions that may lead to conflicts of

interests, to ensure that they are in compliance with the Stock Exchange of Thailand’s

rules and regulations together with the laws relating to the Company’s business.

6. Review and consider with the management on the defects that have been found out

and on the responses from the management.

7. Empower on the auditing and investigating all related party under the authorization of

the Audit Committee and is authorized in hiring an expert so as to audit and investigate

in compliance with the Company’s regulations.

8. Prepare an annual disclosure report on the corporate governance of the Audit

Committee to be included in the annual report, affixing the signature of the Chairman of

the Audit Committee. Minimum contents to be disclosed in the report are the Audit

Committee’s performing, number of attending the meeting, attendants and overall

opinions of the Committee.

9. Consider, select, nominate and recommend remuneration of the Company’s external

auditor. The Audit Committee shall meet privately with the external auditor at least once

a year, without the management team being present.

10. Consider scopes of work and plans of the external auditor and the internal audit

department in order to ensure cooperation of both parties and ensure there is reductive

double operations of financial auditing.

11. Approve charter, work plans, budget and manpower of the Internal Audit Department.

12. Review the efficiency and effectiveness of Information Technology System in relation to

the Internal Control and the Risk Management.

ANNUALREPORT

2011

48

13. If the Audit Committee find the issue that may affect the financial and performance of

the Company, the Audit Committee shall report to the Board to improve it in due

course.

14. Perform any other acts assigned by the Board, with the approval of the Audit

Committee.

Composition of the Audit Committee

1. The Audit Committee shall be comprised of at least 3 independent members of the

Board, that all non-executive.

2. At least 1 member of the Audit Committee must have knowledge, understanding or

experience in accounting or finance to review the financial report process to ensure the

reliability.

Criteria for the appointment and nomination of the Audit Committee members

The Audit Committee is nominated by the Nomination Committee and shall be appointed by

the Board of Directors or shareholders. A committee member must possess full qualifications

according to the criteria as follows:

1. Holding shares not more than 1 percent of number of voting stock of the Company,

subsidiary companies, associated companies or related company, which shall be

inclusive of the shares held by related persons.

2. Persons who have benefits or financial and/or managerial interests in the Company

and/or its related companies, either at present or during the past two years, shall be

prohibited to hold the position of independent director of the Company. Such prohibited

relationships include:

x Executive director, employee, worker, advisor who receives regular salary or

controlling person;

x Professional advisors such as auditor, legal advisor, financial advisor or

appraiser; and

x Persons with business relationships through such means as normal business

transaction, acquisition or disposition of assets, and offering or receipt of financial

assistance, etc.

ANNUALREPORT

2011

49

3. In case of concurrently holding the position of independent director at other companies

in the same group, the Company shall disclose such information and compensations

received from such other companies.

4. Audit Committees are prohibited to be any types of directors at any other listed

companies in the same group.

5. Being a director who is not a related person or close relative of any management

member or major shareholder of the Company.

6. Being a director whom is not appointed as a representative to safeguard interests of the

Company’s directors, major shareholders or shareholders who are related to the

Company’s major shareholders.

7. Being capable of performing duties, giving opinions or reporting the results of

performance of work according to the duties delegated by the Board frees and clears

from the control of the management or the major shareholders of the Company

including related persons or close relatives of the said persons.

Related persons include persons who have relationship with or are related to the

Company to the extent that they cannot perform their duties independently or in a

flexible manner such as supplier, customer, creditor, debtor or person who has

business relation that is material etc.

1.4 COMPENSATION COMMITTEE

The Company’s Compensation Committee consists of three members, as follows:

1. Mr. Chali Sophonpanich Chairman of the Committee

2. Mr. David Desmond Tarrant Committee’s member

3. Mr. Jirapongs Vinichbutr Committee’s member

Roles, duties and responsibilities of the Compensation Committee

1. Propose policy and criteria for compensation of the Board of Directors’ and

Sub-committees’ members including meeting allowance, bonus, welfare and other

compensation in both cash and non-cash terms, by taking into consideration similar

compensation in the industry.

2. Determine cash and non-cash welfare and other benefits for the Company’s

employees.

ANNUALREPORT

2011

50

1.5 NOMINATION COMMITTEE

The Company’s Nomination Committee consists of four members, as follows:

1. Mr. Chali Sophonpanich Chairman of the Committee

2. Mr. Jirapongs Vinichbutr Vice Chairman of the Committee

3. Mr. David Desmond Tarrant Committee’s member

4. Mr. Threekwan Bunnag Committee’s member

Roles, duties and responsibilities of the Nomination Committee

1. Set criteria and methodology for selection of the Board’s and Sub-committees’

members as well as President and Managing Director, for the purpose of transparency.

2. Nominate members of the Board and Committees for the Board and/or shareholders to

appoint.

3. Recruit and appoint those nominees to be President and Managing Director.

1.6 MANAGEMENT TEAM

The Company’s management team is as follows:

1. Mr. Wei Cheng Kuan President

2. Mr. Virapan Pulges Managing Director

3. Dr. Somsak Chaiyaporn General Manager

4. Mr. Pornthep Pisalangkul Assistant General Manager

5. Mr. Peerapat Srisukont Head of Project Development

6. Mr. Somsak Ratanavirakul Head of Marketing

7. Miss Siriporn Sombatwatthana Head of Administration

8. Miss Lalitphant Phiriyaphant Head of Finance and Company Secretary

9. Mr. Komkrit Laowakoon Head of Accounts and IT

Authorities and Duties of the Management

The Management are authorized to carry out tasks assigned by the Board of Directors under

the rules, regulations and Articles of Association of the Company. However, any member of

the Management having a material interest, directly or indirectly, or having a conflict of

interests in any matter with the Company/Subsidiaries, as defined by the SEC, has no right

to engage in such matter.

ANNUALREPORT

2011

51

2. COMPENSATION FOR DIRECTORS AND MANAGEMENT

Criteria for determination of Directors’ compensation

The Directors’ compensation has been fixed by taking into consideration the duties and

responsibilities of the Directors. Furthermore, the Company’s performance and similar Directors’

compensation of listed companies in the industry have been taken into account as well. The

compensation has been initially determined by the Compensation Committee, and proposed to

shareholders for approval.

2.1 Compensation in cash

In year 2011, the compensations (accrual basis) paid to Directors and Audit Committee’s

members are as follows:

Unit : Baht

DirectorsMeeting allowance

BonusBoard Audit Committee

Mr. Chali Sophonpanich 120,000 - 1,130,000

Mr. David Desmond Tarrant 40,000 30,000

-000,04nauKgnehCieW.rM

-000,07segluPnapariV.rM

Mr. Pote Videtyontrakich*

Total 470,000 110,000 6,950,000

Note: * Mr. Pote Videtyontrakich has resigned his position as a director since April 21, 2011.

During the same period, the compensations (accrual basis) paid to the Company’s

Management totaling 9 persons are as follows:

Amount (Baht)

Salary

Bonus

Provident Fund

18,609,900

2,526,350

666,324

475,208,12latoT

970,000

900,000

900,000

900,000

900,000

800,000

450,000

2.2 Other compensations

In 2011, no other compensation was paid to Directors and Management.

ANNUALREPORT

2011

52

CORPORATE GOVERNANCE

1. SHAREHOLDERS TREATMENTS

The Company takes shareholders’ equitable treatment, especially their rights of access to the

Company's information in sufficient detail and in a timely manner. This information has been

provided via the SET electronic company information disclosure system, press releases as

required by the Public Limited Company Act, as well as via the Company's web site,

http://www.ticon.co.th

Besides the disclosure of information, the Company also pays attention to the shareholders'

meeting, particularly in the composition of the meeting, so as to ensure the equitable treatment of

the shareholders. The Company arranges meetings by selecting a suitable date, time and place to

accommodate most shareholders. Map of the meeting’s venue is attached to the invitation letter.

The letter contains objective and reason and the Board of Directors' opinion on each agenda item.

The letter is sent to the shareholders 7 days prior to the meeting, or 14 days prior to the meeting in

the event that the notice of the meeting contains a special agenda, according to the Company's

Articles of Association.

All essentially relevant information is provided to the shareholders as supporting information for

voting purposes. The Annual Report, containing information of the Company’s performance during

the previous year, is attached with the invitation letter as well. Moreover, the proxy form, containing

the information of Audit Committee’s member(s) being proposed as a proxy, is provided for the

Shareholders with a format that helps the shareholders to choose when voting for each agenda

item. The Company also attaches its Articles of Association in regard to voting requirement of the

agenda with the invitation letter, together with the evidence required for attending the meeting.

Starting from 2007, the Company offers the shareholders the opportunity to propose the meeting’s

agenda(s) and any qualified person(s) to be director(s) in advance of the meeting. The criteria and

procedures of the proposal are clearly informed on the Company’s website.

In every meeting, the Board of Directors’ and Audit Committee’s members and Management have

been represented at the meeting. The Chairman of the Board, or any person voted by the

Shareholders as chairman for the meeting, presides over the meeting according to the ordered

agenda. In order to create transparency, the Company also clarifies voting method and informs

voting results to the Shareholders. The Shareholders are welcome to express opinions and ask

questions freely. The Company provides the shareholders with clear answers.

The Board of Directors has monitored the record of the minutes of the meeting to ensure that such

minutes contain a clarification of significant issues, questions, and opinions, as well as the voting

required for each agenda. The minutes are finished in time, kept properly and accessible for

ANNUALREPORT

2011

53

verification and examination. The Company also records voting results in the minutes in order to

promote transparency.

All the meeting related information is provided on the Company’s website, both in Thai and

English, including the invitation letter to be disclosed prior at least 1 month to the meeting and the

minutes of the meeting which will be disclosed within 14 days after the meeting. Moreover, an

audiovisual recording of the meeting is also accessible on the Company’s website.

There were 6 directors attended and 2 directors absent the 2011 Annual General Meeting of

Shareholders.

2. STAKEHOLDERS TREATMENTS

The Company has realized that all stakeholders, including employees, suppliers, customers,

lenders, community, society, as well as competitors, all play a part in the Company's business

success. As a result, the Company is very much concerned that the employees are treated equally

and fairly; that products and services bought from suppliers are in accordance with normal

business conditions and agreements; that customers are provided with good products and

services and their information is treated as confidential; that borrowing agreements are strictly

honored; that community, environment and society are responsibly treated and that only fair

business practices are used in relation to competition with its competitors. Stakeholders can inform

the Company of any unfair matters to the Company via telephone or website.

3. BOARD OF DIRECTORS

The Company's Board of Directors consists of 8 persons, with 3 members of the Audit Committee

which are independent directors. The authorities of the Chairman of the Board, the President and

the Managing Director have been clearly separated so as to reduce overall individual influence.

The Directors meet regularly at least once a quarter to consider the business of the Company.

A notice of the meeting, containing a clear agenda, together with supporting documents, is

normally sent to the Directors at least 7 days prior to the meeting except when urgent, as required

by the Articles of Association.

ANNUALREPORT

2011

54

The following table shows the attendance of each Director in year 2011.

Number of attendances(7 meetings in total)

1. Mr. Chali Sophonpanich

2. Mr. David Desmond Tarrant

3. Mr. Direk Vinichbutr

4. Mr. Jirapongs Vinichbutr

5. Mr. Wei Cheng Kuan

6. Mr. Virapan Pulges

7. Mr. Threekwan Bunnag

8. Mr. Chatchaval Jiaravanon

6

4

2

6

4

7

7

4

The Company Secretary is responsible for arranging the meetings, preparing agendas and

supporting documents, circulating agendas and recording all the proceedings in the minutes with

all significant details and opinions within 14 days from the meeting date, filing all relevant

documents properly and providing the Board with any advice regarding rules and regulations

relating to meetings’ agendas.

The Board of Directors plays a significant role in the following areas so as to encourage the

Company to participate in a good corporate governance.

x At the beginning of the year, the Board of Directors will consider determining the Company’s

business strategy and operation targets as well as review the management performance for

the previous year. Performance against target will be reviewed, with a view to optimizing

future business policy and set appropriate targets for the following year.

x To encourage the effectiveness of the Board’s operation, a review of the Boards’

performance, as well as an analysis of any problems and obstacles during the previous year,

will help the Board optimize its performance. The Board, therefore, conduct a self assessment

every year.

x The Board of Directors will propose the basis of Directors’ compensation, initially proposed by

the Compensation Committee, to shareholders for approval. To date, the said compensation

has been approved by the shareholders, after taking into consideration the duty and

responsibility of the Directors. The Chairman of the Board has been paid a higher

compensation. Directors who are assigned additional responsibility, such as servicing as

members of the Audit Committee, have been paid appropriately more compensation.

The compensation paid to the Directors and Audit Committee’s members in year 2011 is

disclosed in the topic of “Compensation for Directors and Management”.

ANNUALREPORT

2011

55

x To encourage efficiency and prudence of business management, the Board of Directors has

determined duties and responsibilities of Directors and Management regarding financial

authorization. The amount of such authorization has been determined in regard to the

purchase/lease of assets, disposal/lease out of assets, as well as signing of loan agreements

with financial institutions. The Company has already informed the Directors, Audit Committee

members, Management and relevant employees concerning such authorization.

x The Board of Directors and Audit Committee have regularly monitored and acknowledged all

connected transactions and transactions which might lead to any conflicts of interests. The

appropriateness of the said transactions has been prudently considered on an arm’s length

basis, and any Director who has a conflict of interest has no voting right in such matters. In

addition, the Board of Directors and Audit Committee have also overseen compliance with the

relevant rules and regulations concerning connected transactions. In consideration of

connected transactions, the Director who might have conflict of interests is not entitled to vote.

The opinion of the Audit Committee regarding the Company’s connected transactions has

been disclosed in the topic of “Connected transactions”.

x The Board of Directors has prepared a report indicating its responsibilities for financial

statements, as appended to the auditor’s report, to ensure that the Company’s financial report

is complete, true, reasonable and in compliance with generally accepted accounting standard

and relevant regulations. The Company regularly conducts appropriate accounting policy.

x Even though the Chairman of the Board represents a major shareholder, the Company has

the Audit Committee to help ensuring that the approval of any transactions is carried out

correctly, transparently and fairly.

x In 2009, the Board of Directors has formulated the Corporate Governance Policy in which the

relevant policy and key principal are complied for the directors and employees to follow in

their performance of duties. The details of the policy have been posted on the Company's web

site, http://www.ticon.co.th

ANNUALREPORT

2011

56

4. AUDIT COMMITTEE

The Company has three Audit Committee’s members. All the members are independent, which

holds the Company’s ordinary share less than 1 percent, non-executive Directors, and have

accounting and/or finance background. The Audit Committee assists the Board in fulfilling the

Company’s good corporate governance, particularly in providing visions of business, commenting

on financial reports and internal control systems, and monitoring the completion and compliance

with relevant standards and regulations of the disclosure of financial reports. All these actions

enhance the quality of the said reports.

The Audit Committee has played an important role in the following areas to enhance good

corporate governance:

x The Audit Committee’s meetings are arranged at least once a quarter to consider the above

matters. The Company’s auditor also joins the meeting in every round of consideration of the

financial reports.

The following table shows the attendance of each Audit Committee’s member in year 2011.

Number of attendances(4 meetings in total)



3. Mr. Chatchaval Jiaravanon

3

4

4

Presently, the Company’s Internal Auditor is responsible for taking care of the Audit Committee’s

activities, including arranging the meeting, preparing agenda and supporting document, circulating

agenda, recording all the proceeding in the minutes and filing relevant document.

x The Audit Committee will report all activities which have already been carried out to the Board

of Directors’ Meeting at least every quarter. The Committee has policy on reporting any

essential incidents to the Board immediately. In addition, the Committee has prepared a

report to the shareholders in the Annual Report.

x The Company has the Audit Committee’s Charter. The charter includes roles and

responsibilities of the Committee. This will help enhancing the effectiveness of the Committee.

5. EXECUTIVE COMMITTEE

The Executive Committee has 5 members who are appointed by the Board of Directors to perform

duties assigned by the Board of Directors.

ANNUALREPORT

2011

57

6. COMPENSATION COMMITTEE

The Compensation Committee comprises 3 Directors who are appointed by the shareholders or

the Board of Directors. The Committee is responsible for monitoring the transparency and fairness

of the determination of the Directors’ and Management’s compensations, as well as the provision

of the employees’ welfare.

The Compensations mentioned above will be determined according to market practice, the

Company’s performance and duties and responsibilities of the Directors and Management.

The following table shows the attendance of each Compensation Committee’s member in year

2011.

Number of attendance(1 meeting in total)




1

1

1

7. NOMINATION COMMITTEE

The Nomination Committee comprises 4 Directors who are appointed by the Board of Directors.

The Committee is responsible for setting criteria and methodology for selection of the Company’s

Directors, Committees’ members, President and Managing Director, for the purpose of

transparency.

The following table shows the attendance of each Nomination Committee’s member in year 2011.

Number of attendance(1 meeting in total)





1

1

1

1

8. OTHER COMMITTEES

- None -

All details of the Board and Committees, including names and responsibilities, were described in

the item of “Management”.

ANNUALREPORT

2011

58

9. BUSINESS ETHICS

The Company has code of ethics contained in the Company’s Manual. The manual also includes

guidelines in relation to inside information usage for personal benefits.

10. RELATED PARTIES RELATIONSHIP

As a public listed company, TICON appreciates the need to disclose full, accurate information on a

timely basis. The Company has assigned Management to be responsible for providing information

to investors, shareholders, analysts and relevant agencies. The table below presents details of IR

person.

Name Position E-mail Address

Ms. Lalitphant Phiriyaphant Head of Finance [email protected]

Suite 1308, 13/1th Floor,

Sathorn City Tower, 175

South Sathorn Road,

Bangkok 10120

Tel. (662) 679-6565

Fax. (662) 287-3153

In addition to the regular meetings at TICON’s offices and site visit requested by

investors/analysts, TICON also participated analyst meetings, Opportunity Day, arranged by the

Stock Exchange of Thailand each quarter, as well as local/international roadshows arranged by

securities companies. The activities help investors not only to understand more on TICON but also

enhance relationship with Management.

11. MONITORING OF INSIDER TRADING

The Company has put in place a policy and measures relating to inside information as follows:

x Directors and management have been notified of their responsibilities to report TICON

shareholding, according to the Section 59 of the Securities and Exchange Act B.E. 2535 as

well as the relevant penal provisions.

x Management has been notified to refrain from trading of TICON shares during periods when

they are in possession of material information not yet disclosed to the public, which might

affect the share price. The Company has also notified Management not to disclose such

information to outsiders. Management is aware of the penalties regarding misuse of such

information.

x Information which might leak to the public will be clarified via the SET, so as to create fairness

among shareholders and investors.

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12. SOCIAL RESPONSIBILITY

The Company realizes the importance of the social and environmental responsibility, and of the

community. Therefore, over the past years, the Company carried out public-spirited activities. The

details of which are as follows:

x Constructing a school building for Yensira Baan Man Khao school, Loei province

x Donating computer to Wat Suan Kaew, Nonthaburi province

x Donating to help flood victims through The Stock Exchange of Thailand

x Preparing relief bags for flood relief, cooperated with the Thai Listed Companies Association,

the Stock Exchange of Thailand and other capital markets organisations, Bangkok

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INTERNAL CONTROL AND INTERNAL AUDIT

The Board of Directors’ Meeting No. 1/2012 had reviewed the appropriateness and sufficiency of the

Company’s internal control systems in regard to the Company’s organization and environment, risk

management, management operation control, information and communication system and monitoring

system. The Board was of the opinion that the Company has appropriate and sufficient internal control

systems, including:

x The Company’s business targets, which were determined in the form of earnings per share, were set

out. The result of each year has been compared with the target. Discussions have taken place in the

event that the targets were not achieved in order to improve the Company’s performance in the

following year.

x The management’s approval authorities were clearly determined. However, any member of

management potentially involve in any conflict of interest will not be authorised to approve such

matters. The responsibilities for approving transactions, recording accounting matters and monitoring

assets are defined separately for transparent monitoring.

x The Management’s responsibilities in controlling the Company’s assets are determined. In addition,

the responsibilities of operators, controllers and assessors are clearly separated, so as to balance

the authorities and encourage appropriate examination of each other.

x The financial reports were prepared systematically, including a filing process, an examination/audit

by external auditor, and a review of the financial report by the Audit Committee and the Board of

Directors before disclosing such report to the public, so as to ensure accuracy and completeness.

x Risks which might occur from the Company’s operation have been identified. Probabilities and

consequences of occurrence of the risk have been assessed. The measures to prevent the risk have

been determined. As well, a group of persons were assigned to implement such measures to avoid

the risk.

x The Internal Audit unit, reporting directly to the Company’s Audit Committee, was set up to examine

the Company’s compliance with laws, related regulations and internal control systems. The

examinations have been undertaken both for the Company’s head office and site offices. The Internal

Auditor has analyzed the examination results which lead to the determination of measures to control,

monitor and deal with the problems. The proposed measures have been submitted to the Audit

Committee for consideration.

x The Company and its subsidiaries’ external auditor has made no adverse opinions in regard to the

Company’s internal control.

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61

The internal control, which has made efficient operation, is the key to the Company’s business. It was

reasonably confident that the Company’s performance was able to achieve the objective and generated

benefit in long term. Moreover, it was ensured that the financial information and operation were reported

accurately and completely. It was also assured that the Company’s operation has complied with laws,

related regulations and to protect risks that may arise.

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2011

62

CONNECTED TRANSACTIONS

1. DETAILS OF THE CONNECTED TRANSACTIONS

1.1 Purchase of land from related party

The Company has acquired plots of land for factories/warehouses development from Rojana

Industrial Park Public Co., Ltd. (“Rojana”) for many years. Rojana is considered as a related

party which might have a conflict of interest with TICON. Rojana is a major shareholder of

TICON. Two of its directors, Mr. Direk Vinichbutr and Mr. Jirapongs Vinichbutr, are directors of

TICON.

In 2011, the Company purchased 3 plots of land from Rojana, with the amount of Baht 86.47

million in total.

Opinion of the Audit Committee

The Audit Committee has considered the transaction mentioned above by taking into

consideration the market price of the land in the surrounding areas. The Committee was of the

view that such transaction was necessary, reasonable and determined at market price, with

terms and conditions as practiced in the market.

1.2 Lease of office space from related party

The Company has leased office space from Sathorn City Tower Property Fund (“the Fund”). A

major shareholder of the Fund relates to a shareholder and a director of the Company, details of

which are as follows;

1. City Realty Group, a major shareholder of the Fund, held a 6.4 percent stake directly and

indirectly in TICON, as of March 15, 2012.

2. Mr. Chali Sophonpanich is a shareholder and an authorized director of TICON as well as of

the associated companies in the City Realty Group.

In 2011, the Company leased office space from the Fund, with the rental fee totaling Baht 13.09

million.

As of December 31, 2011, there was no accrued expense on this fee.

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63


The Audit Committee has considered the transaction mentioned above by taking into

consideration office rental in the surrounding areas. The Committee was of the view that such

transaction is reasonable and determined at market price with similar services and conditions as

others.

1.3 Use of financial services provided by related party

The Company has used financial services provided by Bangkok Bank Public Co., Ltd. (“BBL”).

A major shareholder of BBL is the Sophonpanich family which relates to Mr. Chali

Sophonpanich, a shareholder and a director of TICON.

At the end of 2011, TICON had outstanding balance of the financial transactions with BBL

as follows:

Transaction Interest rate/fee

(% per annum)

Outstanding balance

(Million Baht)

Long-term loans

Short-term loans

Letter of Guarantee

Fixed deposit

Current investments

MLR minus a certain rate

market rate

as announced by the bank

as announced by the bank

market rate

1,000.53

100.00

9.59

1.36

350.00

As at December 31, 2011, the Company had Baht 0.06 million accrued interest expense and

Baht 0.06 million accrued interest income. However, both items had already been settled in

early 2012.

In 2011, BBL has subscribed Baht 350 million debentures issued by TICON. The debentures

have 5 years tenor with fixed coupon rate for the whole term.


The Audit Committee has considered the transactions as mentioned and was of the opinion that

such transactions were reasonable and determined at market price with proper terms and

conditions as practiced in the market.

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64

1.4 Use of securities trading services provided by related party

In 2011, the Company has traded units of TFUND and TLOGIS via Asia Plus Securities Public

Co., Ltd. (“ASP”). Mr. Chali Sophonpanich is a director of ASP as well as TICON.

Total brokerage fee paid to ASP during 2011 was Baht 0.066 million.

As at December 31, 2011, there was no accrued expense in regard to this transaction.


The Audit Committee has considered the transactions mentioned above and was of the opinion

that such transactions were necessary and determined at market price with conditions as

practiced in the market.

The Company’s Board of Directors’ Meeting No. 4/2008, held on August 13, 2008, has authorized the

Management to make a decision on any connected transactions determined at market or fair price.

2. NECESSITY AND REASONABLENESS OF THE TRANSACTIONS

The connected transactions mentioned above were necessary and benefit the Company. They were

carried out at fair and reasonable price, as stated in the opinion of the Audit Committee.

3. MEASURES AND PROCEDURES TO APPROVE CONNECTED TRANSACTIONS

The Audit Committee is responsible for ensuring the fairness of the connected transactions by taking

into consideration the highest benefits to the Company. The Committee also monitors the disclosure

of the transactions in compliance with the SET regulations. The Company has a procedure engaged

in relation to the connected transactions as follows:

x The Company’s Board of Directors’ Meeting No. 4/2008, held on August 13, 2008, has

approved in principle to authorize the Management to make a decision on on-going and future

connected transactions with the condition that such connected transactions are undertaken on

arm’s length basis. The Management shall report such transactions to the Board of Directors’

Meeting to be held following the transactions.

x The Audit Committee will ensure that the connected transactions be determined at market or

fair price. The transactions will be approved by the Board of Directors or the Shareholders (as

the case may be). Director(s) or shareholder(s) who has potential conflict of interest on the

transaction has no right to vote on the transactions.

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65

x The transactions will be disclosed in compliance with relevant SEC/SET regulations, as

specified in the Company’s Articles of Association.

x The transactions will be disclosed in accordance with accounting standards issued by the

Accountants Association.

4. POTENTIAL FUTURE CONNECTED TRANSACTIONS

Future connected transactions are expected to be carried out as long as it provides benefits to the

Company.

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66

MANAGEMENT DISCUSSION AND ANALYSIS

1. OPERATING RESULTS

1.1 Revenues

Rental and related service income is the Company’s main income. Over the past three years,

rental and related service income, as compared with total revenues, were approximately 32.9

percent, 29.0 percent and 41.3 percent, respectively. However, income from sales of properties

to TFUND/TLOGIS was the major portion of total revenues, representing 62.2 percent, 59.2

percent and 44.3 percent, respectively. The purpose of sales of properties to the funds is to

fund the Company’s business expansion in response to continuous growing demand for lease.

In some periods, the Company had income from sales of factories to tenants, most of which

were under options to buy as specified in the lease contracts. The sales of factories to tenants

are unpredictable and depending upon tenants’ decisions.

The Company had income relating to TFUND and TLOGIS, including share of profit from

investment, property management fee, and realized additional gain on sales of properties. The

said revenues vary in accordance with both funds’ assets size.

Besides, the Company had revenues from construction services and utility income. These

incomes were a small portion of total revenues.

1.1.1 Rental and services income

Over the past three years, rental and services income were Baht 809.2 million, Baht

850.9 million and Baht 880.2 million, respectively. Cost of rental and services for such

periods were Baht 198.5 million, Baht 194.5 million and Baht 248.1 million, respectively.

Rental and services income decreased by 0.3 percent in 2009, but increased by 5.1

percent and 3.5 percent in 2010 and 2011, respectively. In 2011, such income

increased continuously due to the growing demand in factories and warehouses for rent

since 2010, even with the flood effect in October and November in many provinces,

including Ayudhya and Pathumthani, where almost half of TICON’s factories and

warehouses are located. The floods stopped tenants’ operations, resulted in the

Company’s loss of rental and services income of Baht 100.7 million in Q4/2011. Rent

collections will be resumed once the damaged factories/warehouses are restored and

back in production. Since January 2012, some of the tenants have recommenced

paying rent to the Company.

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67

1.1.2 Income from sales of properties to property funds

Over the past three years, the Company had income from sales of properties to TFUND

and TLOGIS of Baht 1,530.0 million, Baht 1,737.7 million and Baht 943.5 million,

respectively, representing a 30.6 percent decrease, 13.6 percent increase and 45.7

percent decrease, respectively.

The increase in such income in 2010 resulted from the Company’s higher capital

requirement for its business expansion, in response to the economic recovery.

In 2011, income from the sales dropped from the previous year, as a result of the

postponement of the second-tranche sales planned for December 2011. Only the sales

to TLOGIS, amounting to Baht 943.5 million, happened in September 2011.

However, sales of properties to property funds each year depend on the Company’s

funding needs for its business expansion.

1.1.3 Income from sales of properties to tenants

In 2010, the Company had income from sales of 2 factories to tenants amounting to

Baht 82.1 million and sales of land to a tenant amounting to Baht 75.1 million. In 2011,

the Company sold 2 factories with the selling price of Baht 133.0 million in total.

Sales to tenants do not occur regularly, depending on tenants’ decisions on exercising

options to buy set as a condition in lease agreements. The gross margin of the sale

varies by age, size, specification and location of the factories.

1.1.4 Income relating to associated companies (TFUND and TLOGIS)

1) Share of profit from investment in TFUND and TLOGIS, under the equity method,

which depends on TICON’s stake in both funds, as well as the funds’ profit.

Over the past three years, the Company has had a share of profit from investment

in associated companies under the equity method of Baht 158.7 million, Baht

168.6 million and Baht 160.8 million, respectively, representing a 83.3 percent and

6.2 percent increase, and 4.6 percent decrease, each year. The rising in the share

of profit resulted from an increase in assets under management of the funds, and

the Company’s greater stake in the funds. However, the share of profit in 2011

reduced from the year before due to the effect of the floods, which led to lower

TFUND’s and TLOGIS’s rents. Without the floods, the share of profit would have

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68

increased, as can be seen from the amount of Baht 142.0 million for the first nine

months of 2011, growing from Baht 124.1 million for the same period of 2010.

2) Income from management of properties for TFUND and TLOGIS

Over the past three years, the Company has had property management fees of

Baht 77.7 million, Baht 107.5 million, and Baht 113.4 million, respectively. Such

income should be higher in the future, due to the Company’s policy in offering

properties for sales to both funds regularly.

3) Gain on sales of investment in associated companies

In 2009, the Company sold 3.5 million units of its investment in TFUND, so as to

reduce its investment portion to be in compliance with the relevant regulations.

The Company posted a loss on sales of Baht 2.3 million, recorded as a part of

administrative expenses. In addition, the Company sold another 1 million units of

its investment in TLOGIS, with a gain on sales of Baht 0.2 million, recorded as a

part of other income.

In 2010, the Company sold 42.6 million units of its investment in TFUND. Baht 28

million gain on sales was recorded as a part of other income.

In 2011, the Company sold 2.85 million units of its investment in TLOGIS with a

gain on sales of Baht 2 million, recorded as a part of other income.

4) Realized additional gain on sales of properties to TFUND/TLOGIS

A gain may occur when TFUND/TLOGIS sell factories/warehouses acquired from

the Company to a third party, or when the Company reduces its stake in

TFUND/TLOGIS.

In 2010 and 2011, the Company had such gains of Baht 38.9 million and Baht 3.5

million, respectively. Most of them were from the reductions of the Company’s

stake in TFUND/TLOGIS. In 2011, the Company reduced its stake in the funds in

a lower portion than in 2010.

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69

1.1.5 Other Income

In addition to the income mentioned above, the Company had other income as follows:

1. Income from construction/modification work which was generated from the

Company’s provision of such work requested by tenants.

2. Utilities income which was generated from the provision of temporary utilities for

tenants whilst they were waiting for permanent supplies from the utilities suppliers.

The Company normally has not sought profit from providing such services to tenants.

1.2 Expenses

1.2.1 Selling and administrative expenses

Over the past three years, selling and administrative expenses were Baht 266.5 million,

Baht 294.7 million and Baht 326.0 million, respectively, representing a 1.9 percent, 10.6

percent, and 10.6 percent increase each year.

The major portion of selling and administrative expenses were employee relating

expenses (including salary, bonus, welfare, travelling, vehicle and training), operating

expenses (including office rental and utilities), management benefit expenses, and

depreciation of vacant factories/warehouses.

In 2011, selling and administrative expenses rose Baht 31.4 million from the previous

year, representing a 10.6 percent increase. The main reason was the change in

recording of the depreciation of leased factories and warehouses affected by the floods

from cost of rental and services to selling and administrative expenses. In addition, the

Company had higher sales commission expenses, following the increase in number of

its tenants. Besides, the Company had repair and maintenance expenses for flooded

factories/warehouses, and provision for employee benefits expense according to

TAS19 - Employee Benefits.

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1.2.2 Finance Cost

Over the past three years, finance cost were Baht 293.8 million, Baht 261.4 million and

Baht 267.2 million, respectively, representing a 10.3 percent increase, 11.0 percent

decrease and 2.2 percent increase, respectively.

Interest expenses were the significant element of finance cost, representing 98.8

percent. The rest were expenses in relation to the provision for financing.

In 2010, even with more borrowing, interest expenses decreased from 2009. The

reason was that in that year the Company funded its operations mostly by issuing

debentures with coupon rate fixed below the interest rate of traditional long-term loans.

In 2011, interest expenses increased from the previous year due to the Company

borrowing more to acquire additional land in several strategic locations, and developing

more factories/ warehouses.

1.2.3 Allowance for impairment loss on assets

In 2011, the Company recorded Baht 15.4 million allowance for impairment loss on

investment properties under development affected by the floods in late 2011, included

in other expenses.

1.3 Profit

1.3.1 Gross profit Margin

The Company had gross profit margin from its operations - rental and sales - over the

past three years of 46.5 percent, 54.5 percent and 51.5 percent, respectively.

Gross margin from rental and sales of warehouses are lower than for factories. The

sales of only warehouses to TLOGIS in 2009, without any sales of factories, in addition

to the growth of leasing out warehouses in 2009, and the sales of factories to TFUND in

2010, without any sales of warehouses, resulted in a lower gross margin in 2009 and a

higher gross margin in 2010.

In 2011, the gross margin from operations reduced from the previous year, since the

Company had sales of warehouses to TLOGIS while it had no sales of factories to

TFUND. Moreover, the 2011 gross margin from rental was also lower, due to the loss of

rental and related service income as a result of the floods in the fourth quarter, as well

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as some repair and maintenance expenses for factories and warehouses affected by

the floods.

1.3.2 Net profit Margin

Over the past three years, the Company’s net profit under the equity method, presented

in consolidated financial statements, was Baht 653.3 million, Baht 821.1 million and

Baht 436.4 million, respectively. Earnings per share were Baht 0.99, Baht 1.22 and

Baht 0.57, respectively. Its net profit margins were 26.6 percent, 28.0 percent and 20.5

percent, respectively.

In 2010, the Company’s net profit increased by Baht 167.8 million from the previous

year due to growth in rental and related service income, sales of properties to property

funds, and management fee from the funds, as well as the share of income from

investments in the funds. Moreover, the Company had income from sales of properties

to tenants, realized additional gain on sales of properties to TFUND, and gain on sales

of investment in TFUND, while it had no such income in 2009.

In 2011, the Company’s net profit declined by Baht 384.7 million, representing a 46.9

percent decrease from the previous year. The main reasons were the reduction in

income from sales of properties to property funds, as well as its reduced gross margin.

In addition, there was a drop in gross margin from rental affected by the floods, a

decrease in realized additional gain on sales of properties to TFUND and TLOGIS, an

increase in selling and administrative expenses, as well as the allowance for

impairment loss on investment properties, as already mentioned. Furthermore, the

Company had an additional corporate income tax of Baht 72.0 million as a result of the

adjustment in deferred tax calculation, details of which are provided in item no. 2.1.6

(Deferred tax assets).

2. FINANCIAL STATUS

2.1 Assets

At the end of 2011, the Company had total assets of Baht 15,288.7 million. 71.9 percent of the

assets were land and factory/warehouse buildings, comprising land and factories/warehouses

under development and available for rent, accounted for 30.6 percent of total assets, and land

and leased factories/warehouses, accounted for 41.3 percent of total assets.

The Company’s total assets rose by Baht 2,804.1 million, a 22.5 percent increase from the

previous year. This mainly resulted from the substantial increase in factories/warehouses

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development, as well as land acquisition in several strategic locations, to respond to increased

demand.

2.1.1 Property under development / available for rent / for rent

During the past three years, the Company had property under development, available

for rent, and property for rent totaling Baht 8,683.0 million, Baht 9,170.7 million, and

Baht 11,497.3 million, respectively. Those in 2010 and 2011 included Baht 507.5 million

property under development recorded as property, plant and equipment.

The 5.6 percent increase in the properties - net of those sold to TFUND - in 2010 was

due mainly to more development of factories/warehouses to serve growing demand.

The reduction in the properties in 2009 - net of those sold to TLOGIS - resulted from

the slowdown of the construction during the economic crisis started in 2008.

At the end of 2011, such properties - net of those sold to TLOGIS - grew by 25.4

percent, as a result of more development of factories/warehouses in response to higher

demand, especially demand for logistics warehouses as distribution centers for

consumer products and auto parts. In addition, the Company acquired land in several

strategic locations to accommodate its business expansion, particularly in the eastern

part of Thailand. Besides, the Company made less sales to property fund during the

year.

2.1.2 Current investments

At the end of 2011, the Company had current investments of Baht 950 million,

increased by Baht 102.6 million, or 12.1 percent.

All current investments as at December 31, 2011 were Bills of Exchange issued by

domestic commercial banks, considered as low risk. Such investment is a good

alternative for the Company to manage its cash. Also, it provides the Company with

higher returns than those from savings deposits.

2.1.3 Accounts receivable - net

At the end of 2011, the Company had net accounts receivable of Baht 98.0 million,

rising by Baht 71.5 million. This mainly resulted from a Baht 45.1 million increase in

unbilled operating leases receivables, which were recorded from the difference

between average rental fees per month throughout lease agreements and the actual

rental fees. Such receivables rose in accordance with the greater numbers of lease

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73

agreements. The higher trade accounts receivable of Baht 26.4 million, resulted from

the flood effect incident, and was also included in the accounts receivable.

However, the Company has a policy of holding security deposits of three to six months

rental and service fee to help mitigating risks that could arise in the future.

2.1.4 Pledged fixed deposit

At the end of 2011, the Company had a fixed deposit of Baht 40.4 million. The deposit

has been pledged with a bank as collateral for facilities, comprising letters of credit and

trust receipts (together with pre-settlement risk lines) as well as letters of guarantees

issued in favor of a government entity, state enterprises and private companies.

2.1.5 Investment

At the end of 2011, TICON had investments in subsidiaries, associated and related

companies as follows:

a. Investment in Eco Industrial Services Co., Ltd. (a subsidiary) of 100 percent of its

paid-up capital, with the investment amount under the cost method of Baht 50.0

million, representing 0.3 percent of the Company’s total assets.

b. Investment in TICON Logistics Park Co., Ltd. (a subsidiary) of 100 percent of its

paid-up capital, with the investment amount under the cost method of Baht 2,515.0

million, representing 16.5 percent of the Company’s total assets.

c. Investment in Shanghai TICON Investment Management Co., Ltd. (a subsidiary) of

100 percent of its paid-up capital, with the investment amount under the cost

method of Baht 24.8 million, representing 0.2 percent of the Company’s total

assets.

d. Investment in TICON Property Fund (an associated company) of 28.02 percent of

the fund’s capital. The investment amount under the equity method was Baht

1,548.6 million, representing 10.1 percent of the Company’s consolidated total

assets, and the investment amount under the cost method was Baht 2,670.2

million, or 17.3 percent of the Company’s total assets.

e. Investment in TPARK Logistics Property Fund (an associated company) of 20.43

percent of the fund’s capital. The investment amount under the equity method was

Baht 349.3 million, representing 2.3 percent of the Company’s consolidated total

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assets, and the investment amount under the cost method was Baht 509.3 million,

or 3.3 percent of the Company’s total assets.

f. Investment in Bangkok Club Co., Ltd. (a related company) of 0.11 percent of its

registered capital, with the investment amount net of allowance for impairment of

Baht 0.26 million.

2.1.6 Deferred tax assets

At the end of 2011, the Company had deferred tax assets of Baht 202.1 million, most of

which related to corporate income tax entitlement in respect of unrealized gain from

sales of properties to TFUND/TLOGIS.

Corporate income tax relating to the gain on sales recorded in the Company’s income

statements excluded a certain amount of the tax at the same percentage as TICON’s

stake in TFUND/TLOGIS, even where the full amount of the tax was already paid in

cash. The difference between the tax paid in cash and the tax recorded in the income

statements was the deferred tax assets. In the event that the Company realizes

additional gain on sales of properties to TFUND/TLOGIS, the deferred tax assets will

be reduced proportionately.

In December 2011, the government issued a Royal Decree in relation to the corporate

income tax reduction. The Company will benefit from the reduction in the tax rate from

30 percent to 23 percent in 2012, and then to 20 percent from 2013-2014. The

Company reflected such changes in its deferred tax calculation which led to additional

corporate income tax of Baht 72.0 million. However, the adjustment was made in

accordance with accounting principle, and has not affected the Company’s cash flow.

2.1.7 Deposit for land acquisition

At the end of 2011, the Company had a deposit for land acquisition of Baht 261.1

million. The deposit was paid according to agreements to purchase land from sellers.

2.2 Liabilities

At the end of 2011, the Company had total liabilities of Baht 9,548.5 million, increased by Baht

2,660.9 million, or 38.6 percent, from those of 2010.

The majority of total liabilities were loans (including debentures), representing 74.9 percent of

total liabilities. The increase in total liabilities resulted from the following elements:

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2.2.1 Loans

Total loans at the end of 2011 were Baht 8,756.6 million, increased by Baht 2,583.4

million, or 41.8 percent, from 2010. This substantial increase was due mainly to the

Company’s greater construction and land acquisition programs.

The Company’s total loans comprised short-term loans of 18.4 percent, long-term loans

of 11.4 percent, and debentures of 70.2 percent.

Cash flow from operations and long-term loans, as well as debentures, are the

Company’s source of funds for factory/warehouse development which is considered as

a long-term investment. The Company likewise uses short-term loans facilities for

working capital, particularly for land acquisition during the period of applying for long-

term credit lines from financial institutions. However, the large amount of short-term

loans outstanding at any point of time depends mainly on the Company’s cash flow

management. The Audit Committee has regularly monitored the appropriateness of the

ratio of short-term to total loans.

During the past three years, the Company issued debentures totaling Baht 6,150

million. At the end of 2011, the outstanding balance of the debentures was Baht 6,150

million. All debentures’ tenors ranged from 3 to 7 years. The total proceeds were used

for the Company’s business expansion and repayment of some portion of loans.

The Company has agreements with some financial institutions and debenture holders

in respect of retaining debt to equity of not exceeding 2.5 times.

2.2.2 Accounts Payable

At the end of 2011, the Company had accounts payable of Baht 249.4 million. 93.0

percent of total accounts payable related to the Company’s construction.

Accounts payable increased by Baht 136.5 million from the previous year, due to the

Company’s growth in factory/warehouse development during the year.

2.2.3 Provision for long-term employee benefits

At the end of 2011, the Company had Baht 18.9 million provision for long-term

employee benefits which was the estimation of the Company’s obligation to

compensate employees on their retirement.

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For the first-time adoption of TAS19 - Employee Benefits, the Company chose to

recognize the transitional liability by way of recording accumulated amount until the end

of 2010 through an adjustment to the beginning balance of its 2011 retained earnings,

and recording provision for employee benefits in 2011 as expenses.

2.2.4 Corporate income tax payable

At the end of 2011, the Company had corporate income tax payable of Baht 24.9

million, decreased by Baht 204.2 million, or 89.1 percent, from the previous year. This

resulted from the reduction in income from sales of properties to property funds. In

addition, the Company has benefited from tax exemption on some portions of profit

from sales of warehouses to TLOGIS in September.

2.3 Shareholders’ Equity

At the end of 2011, the Company had shareholders’ equity of Baht 5,740.2 million, increased by

Baht 143.2 million, representing a 2.6 percent increase from the previous year. The

shareholders’ equity rose marginally as a result of the reduction in retained earnings due to a

high dividend payment during the year, which offset a certain portion of the increase in paid-up

capital due to the exercises of TICON-W4 and the 2011 net profit which was lower than

2010’s.

2.4 Appropriateness of the Company’s Capital Structure

In the past, the Company’s main sources of funds for factories and warehouses development

were operating cash flow, shareholders’ capital injection and loans from financial institutions.

However, with its strong growth during the past 6-7 years, the Company participated in

establishing TFUND in 2005 and TLOGIS in 2009 in order to increase its abilities in raising

more funds. Proceeds from sales of properties to these property funds each year help reduce

reliance on loan borrowing and capital increase.

In addition, during the past 4-5 years the Company has issued debentures with tenors of 3 to 7

years. Issuing debentures is another important source of funds for the Company.

However, with the strong growth of business, the Company foresaw a higher debt to equity

ratio in the next few years, in the absence of raising new capital. In 2009, the Company

therefore decided to issue 219,353,636 warrants (TICON-W3) and 109,677,073 warrants

(TICON-W4) to existing shareholders and 32,883,000 warrants (TICON-W5) to the directors

and employees. In the event that all warrants are exercised in full, the Company shall receive

proceeds of approximately Baht 5,528 million in total.

ANNUALREPORT

2011

77

At the end of 2011, the Company had a debt to equity ratio of 1.66 to 1.

2.5 Liquidity

In 2011, the Company had net cash received from operations amounting to Baht 965.9 million,

net cash used for investment of Baht 2,963.7 million, and net cash received from financing of

Baht 2,301.4 million.

The information as mentioned above shows that the Company has sufficient liquidity for its

operations each year as planned. (A low current ratio does not reflect the Company’s liquidity.

Most of TICON’s assets are land and factory buildings which are not classified as current

assets, whereas accounts payable for the acquisition of land and construction are considered

as current liabilities.)

In 2011, the Company had an interest coverage ratio, calculated from:

Net profit+Interest expenses+Corporate income tax+Deferred gain on sales of properties to associated companies

Interest expenses

and a debt service coverage ratio, calculated from:

Net cash flows from operating activities+Interest expenses

Repayment of long-term loans and debentures+Dividend paid+Interest expenses

of 3.62 times and 0.43 times, respectively. However, an interest coverage ratio in 2011,

equaling 3.62 times, reflected the Company’s high ability to service its finance cost. The

Company has never defaulted on any interest payment. However, in 2011, both ratios

decreased from the previous year due to lower revenues from sales of properties to property

funds.

3. FUTURE PROSPECTS

- Please see “ Message from the Chairman of the Board ” -

ANNUALREPORT

2011

78

STATEMENT OF DIRECTORS’ RESPONSIBILITIESCONCERNING THE COMPANY’S FINANCIAL REPORT

The TICON’s Board of Directors had the management prepare financial statements to reveal the

Company’s financial position and operating results of the year 2010 in accordance with the Public Limited

Companies Act B.E. 2535.

The Board of Directors is well aware of its duties and responsibilities as the directors of a listed company

in the Stock Exchange of Thailand to ensure that TICON’s financial statements are accurate, complete,

and transparent in accordance with generally accepted accounting principles, while providing adequate

information to safeguard the Company’s assets from unlawful conduct and abnormalities which is for the

benefit of shareholders and investors to have true and fair information.

The Board of Directors is of the opinion that the consolidated financial statements of TICON and

Subsidiaries for the year 2011 reviewed by the Audit Committee in collaboration with the Management

and the external auditor, Ernst & Young Office Limited, were presented in a complete, true and fair

manner in compliance with the generally accepted accounting principles and all governing rules and

regulations, with appropriate and consistent accounting policies and adequate information disclosure.

(Mr. Chali Sophonpanich)Chairman of the Board

ANNUALREPORT

2011

79

TICON Industrial Connection Public Company Limitedand its subsidiaries

Report and consolidated financial statements31 December 2011 and 2010

ANNUALREPORT

2011

80

Report of Independent Auditor

To the Shareholders of TICON Industrial Connection Public Company Limited

I have audited the accompanying consolidated statements of financial position of TICON Industrial

Connection Public Company Limited and its subsidiaries as at 31 December 2011 and 2010, the related

consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash

flows for the years then ended, and have also audited the separate financial statements of TICON

Industrial Connection Public Company Limited for the same years. These financial statements are the

responsibility of the management of the Company and its subsidiaries as to their correctness and the

completeness of the presentation. My responsibility is to express an opinion on these financial statements

based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards

require that I plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. I believe that my audits provide a reasonable basis for my

opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the

financial position of TICON Industrial Connection Public Company Limited and its subsidiaries and of

TICON Industrial Connection Public Company Limited as at 31 December 2011 and 2010, and the results

of their operations, and cash flows for the years then ended, in accordance with generally accepted

accounting principles.

Without qualifying my opinion on the aforementioned financial statements, I draw attention to Note 3 to

the financial statements. During the current year, the Company adopted a number of revised and new

accounting standards as issued by the Federation of Accounting Professions, and applied them in the

preparation and presentation of its financial statements.

Rungnapa Lertsuwankul

Certified Public Accountant (Thailand) No. 3516

Ernst & Young Office LimitedBangkok: 28 February 2012

ANNUALREPORT

2011

81

TICON Industrial Connection Public Company Limited and its subsidiariesStatements of financial positionAs at 31 December 2011 and 2010

(Unit: Baht)

Note 2011 2010 2011 2010AssetsCurrent assetsCash and cash equivalents 8, 9Current investments 8, 10 950,000,000 847,370,315 950,000,000 847,370,315Trade and other receivables 8, 11Other current assets 8 62,046,957 45,970,307 36,722,934 27,670,294Total current assets 1,255,771,744 1,118,167,046 1,113,142,419 1,159,338,610Non-current assetsPledged deposits at financial institutions 8, 12 40,437,880 10,858,640 128,000 128,000Unbilled operating leases receivables 18,151,847 16,679,242 4,673,556 9,352,412Long-term loans to related company 8 - - 3,141,068,000 1,397,095,250Investments in subsidiaries 13 - - 2,589,775,840 2,577,775,840Investment in associates 14 1,897,879,326 1,820,709,679 3,179,458,535 2,972,099,177

005,652005,652005,652005,652ynapmocdetalernitnemtsevnIInvestment properties under developmentavailable for rent/sale 15.1 4,674,387,371 4,742,156,103 1,408,763,620 1,979,741,030

Investment properties for rent 15.2 6,315,462,916 3,921,053,800 3,822,487,108 2,757,811,326Property, plant and equipment 16 597,022,660 564,851,129 16,805,919 11,931,224Computer software 17 10,747,818 12,914,544 9,098,532 10,941,782Deferred tax assets 27 202,126,176 258,457,986 9,147,032 3,592,986Deposit for purchase property 8 261,133,740 5,081,480 102,756,210 -Other non-current assets 8 15,352,659 13,443,592 13,967,158 12,979,949Total non-current assets 14,032,958,893 11,366,462,695 14,298,386,010 11,733,705,476Total assets 15,288,730,637 12,484,629,741 15,411,528,429 12,893,044,086

The accompanying notes are an integral part of the financial statements.

Consolidated financial statements Separate financial statements

ANNUALREPORT

2011

82

TICON Industrial Connection Public Company Limited and its subsidiariesStatements of financial position (continued)As at 31 December 2011 and 2010

(Unit: Baht)

Note 2011 2010 2011 2010Liabilities and shareholders' equityCurrent liabilitiesShort-termloansandliabilitiesundertrust receipts 8, 18 1,606,095,688 1,715,647 1,520,095,688 1,715,647Trade and other payables 8, 19 329,333,405 196,065,335 141,993,218 128,555,904Current portion of long-term loans

from related party 8 239,144,000 157,144,000 239,144,000 157,144,000Current portion of debentures 21 850,000,000 1,000,000,000 850,000,000 1,000,000,000Current portion of liability under financial

458,351,3-458,351,3-tnemeergaesael231,673,722889,155,7133,360,922407,409,42elbayapxatemocnI

Other current liabilities 8 18,600,000 14,374,611 13,007,443 13,371,328Total current liabilities 3,068,077,797 1,601,516,778 2,771,792,337 1,531,316,865Non-current liabilitiesLong-term loans from related party 8 761,390,000 864,334,000 761,390,000 864,334,000Debentures 21 5,300,000,000 4,150,000,000 5,300,000,000 4,150,000,000Provision for long-term employee benefits 22 18,933,529 - 16,167,379 -Deferred tax liabilities 27 7,436,150 7,130,308 7,058,114 5,283,913

281,578,602333,627,172662,756,462755,996,293stisopedremotsuCTotal non-current liabilities 6,480,459,236 5,286,121,574 6,356,341,826 5,226,493,095Total liabilities 9,548,537,033 6,887,638,352 9,128,134,163 6,757,809,960



ANNUALREPORT

2011

83

TICON Industrial Connection Public Company Limited and its subsidiariesStatements of financial position (continued)As at 31 December 2011 and 2010

(Unit: Baht)

Note 2011 2010 2011 2010Shareholders' equityShare capital

Registered1,117,252,920 ordinary shares of Baht 1 each

(2010: 1,037,252,920 ordinary sharesof Baht 1 each) 23 1,117,252,920 1,037,252,920 1,117,252,920 1,037,252,920

Issued and paid up781,005,203 ordinary shares of Baht 1 each

(2010: 686,345,728 ordinary sharesof Baht 1 each) 23 781,005,203 686,345,728 781,005,203 686,345,728

355,785,501-355,785,501-noitpircsbuserahsmorfstpiecerhsaCPremium on ordinary shares 23 3,510,089,029 2,857,905,222 3,510,089,029 2,857,905,222Retained earnings

Appropriated - statutory reserve 25 111,725,292 103,725,292 111,725,292 103,725,292133,076,183,2247,475,088,1462,488,368,1816,954,653,1detairporppanU

Other components of shareholders equity (19,085,574) (20,456,768) - -Equity attributable to owners of the Company 5,740,193,568 5,596,991,291 6,283,394,266 6,135,234,126

--8963seiraidisbusfostseretnignillortnocnoNTotal shareholders' equity 5,740,193,604 5,596,991,389 6,283,394,266 6,135,234,126Total liabilities and shareholders' equity 15,288,730,637 12,484,629,741 15,411,528,429 12,893,044,086


Directors


ANNUALREPORT

2011

84

TICON Industrial Connection Public Company Limited and its subsidiariesIncome statementsFor the years ended 31 December 2011 and 2010

(Unit: Baht)

Note 2011 2010 2011 2010RevenuesRental and related service income 8 880,228,726 850,872,730 574,875,436 657,354,046Revenues from construction services 8 21,574,136 20,628,524 21,032,089 21,658,221Sales of properties to unrelated parties 132,971,250 157,176,750 132,971,250 157,176,750Sales of properties to related parties 8 943,500,000 1,737,747,003 49,297,875 1,737,747,003

854,036,8197,907,9768,325,61059,985,02emocniytilitUDividend income from subsidiary 8, 13 - - 32,499,896 17,499,944Dividend income from associates 8, 14 - - 231,881,463 205,042,013Management fee income from associates 8 113,444,855 107,490,798 110,781,476 105,135,556Other income 8 19,084,030 43,011,629 113,266,413 65,949,035Total revenues 2,131,392,947 2,933,451,301 1,276,315,689 2,976,193,026Expenses

052,491,431949,223,031616,494,491381,221,842secivresdetalerdnalatnerfotsoC442,007,51929,666,81898,409,51846,879,81secivresnoitcurtsnocfotsoC

Cost of sales of properties to unrelated parties 63,600,689 95,665,141 63,600,689 95,665,141Cost of sales of properties to related parties 636,992,902 959,254,316 34,919,620 959,254,316

854,036,8197,907,9768,325,61059,985,02seitilitufotsoC471,657,8148,010,01770,727,31766,930,91sesnepxegnilleS

Administrative expenses 8 214,093,176 190,040,605 165,279,551 156,264,417988,925,93572,336,14004,219,09242,709,29noitaicerpeD017,819,4808,235,51055,229,4636,255,51sesnepxerehtO

Total expenses 1,329,877,093 1,581,445,470 489,676,453 1,422,913,599Profit before share of income from investmentsin associates, finance cost andcorporate income tax 801,515,854 1,352,005,831 786,639,236 1,553,279,427

Share of income from investments in associates 14 160,801,083 168,587,006 - -Realised additional gain on sales of properties

to associate 14 3,519,425 38,900,885 - -Deferred gain on sales of properties to associates 14 (63,198,756) (219,029,009) - -Profit before finance cost andcorporate income tax 902,637,606 1,340,464,713 786,639,236 1,553,279,427

Finance cost 8 (267,152,212) (261,438,014) (263,572,629) (260,642,293)Profit before corporate income tax 635,485,394 1,079,026,699 523,066,607 1,292,637,134Corporate income tax 27 (199,092,530) (257,928,090) (81,968,156) (304,714,606)Profit for the year 436,392,864 821,098,609 441,098,451 987,922,528

Profit attributable to:825,229,789154,890,144975,890,128228,293,634ynapmoCehtfosredlohytiuqE

0324seiraidisbusehtfostseretnignillortnoc-noN436,392,864 821,098,609

Earnings per share 29Basic earnings per share

Profit attributable to equity holders of the Company 0.57 1.22 0.58 1.47

Diluted earnings per shareProfit attributable to equity holders of the Company 0.56 1.15 0.56 1.38



ANNUALREPORT

2011

85

TICON Industrial Connection Public Company Limited and its subsidiariesStatements of comprehensive incomeFor the years ended 31 December 2011 and 2010

(Unit: Baht)

2011 2010 2011 2010

Profit for the year 436,392,864 821,098,609 441,098,451 987,922,528

Other comprehensive income:Exchange differences on translation offinancial statements in foreign currency 1,371,194 (406,768) - -

Other comprehensive income for the year 1,371,194 (406,768) - -

Total comprehensive income for the year 437,764,058 820,691,841 441,098,451 987,922,528

Total comprehensive income attributable to:Equity holders of the Company 437,764,016 820,691,811 441,098,451 987,922,528Non-controlling interests of the subsidiaries 42 30 - -

437,764,058 820,691,841 441,098,451 987,922,528



ANNUALREPORT

2011

86

TICONIndustrialConnectionPublicCom

panyLimitedanditssubsidiaries

Statementsofchangesinshareholders'equity

Fortheyearsended31December2011and2010

(Unit:Baht)

Exchange

differenceson

latoTgnillortnoc-non

otot

elbatubirttafo

stnenopmoc

laicnanifrevotne

mtsevnistpiecer

hsaC

dnadeussI

'sredloherahsfo

stseretnifo

srenwo

'sredloherahsni

stnemetats

foeulav

koobno

muimer

Perahs

morfpu-diap

ylluf sharecapital

subscription

ordinaryshares

Appropriated

Unappropriated

asubsidiary

foreigncurrency

equity

theCompany

thesubsidiaries

equity

Balanceasat31December2009

659,854,052

2,935,785

2,666,601,182

103,725,292

1,580,508,416

(20,050,000)

-(20,050,000)

4,993,574,727

124

4,993,574,851

Convertedrighttopurchaseordinary

617,597,712-

617,597,712-

--

--

04 0,403,191-

676,194,62latipac

erahsot

serahs

867,156,201-

867,156,201-

--

--

-867,156,201

-noitpircsbus

erahsmorf

stpiecerhsa

C

)787,227,735()65(

)137,227,735(-

--

)137,227,735(-

--

-)23

etoN(

diapdnedivi

D Totalcomprehensiveincomefortheyear

--

--

821,098,579

-(406,768)

(406,768)

820,691,811

30820,691,841

Balanceasat31Decemberr2010

686,345,728

105,587,553

2,857,905,222

103,725,292

1,863,884,264

(20,050,000)

(406,768)

(20,456,768)

5,596,991,291

985,596,991,389


686,345,728

105,587,553

2,857,905,222

103,725,292

1,863,884,264

(20,050,000)

(406,768)

(20,456,768)

5,596,991,291

985,596,991,389

Cumulativeeffectofchangesinaccountingpolicy

foremployeebenefits-netdeferredtax

)173,084,11(-

)173,084,11(-

--

)173,084,11(-

--

-)5

dna3

etoN(

stessa


sharestosharecapital(Note23)

94,659,475

-652,183,807

--

--

-746,843,282

-746,843,282

Cashreceiptsfromsharesubscription

transferredtosharecapitalduringtheyear

-(105,587,553)

--

--

--

(105,587,553)

-(105,587,553) )102,733,429(

)401()790,733,429(

--

-)790,733,429(

--

--

)23eto

N(diap

dnediviD Totalcomprehensiveincomefortheyear

--

--

436,392,822

-1,371,194

1,371,194

437,764,016

42437,764,058

Unappropriatedretainedearnings

--

--

--

)000,000,8(000,000,8

--

-evreser

yrotutatsot

derrefsnart


781,005,203

-3,510,089,029

111,725,292

1,356,459,618

(20,050,000)

964,426

(19,085,574)

5,740,193,568

365,740,193,604

Theaccompanyingnotesareanintegralpartofthefinancialstatements.

Retainedearnings

Consolidatedfinancialstatements

Othercomprehensiveincome

Othercomponentsofequity

EquityattributabletoownersoftheCompany

ANNUALREPORT

2011

87

(Unit:Baht)

Issuedand

Cashreceipts

Total

fullypaid-up

fromshare

Premiumon

shareholders'

sharecapital

subscription

ordinaryshares

Appropriated

Unappropriated

equity


659,854,052

2,935,785

2,666,601,182

103,725,292

1,931,470,534

5,364,586,845


sharestosharecapital

26,491,676

-191,304,040

--

217,795,716


-102,651,768

--

-102,651,768

Dividendpaid(Note32)

--

--

(537,722,731)

(537,722,731)

Totalcomprehensiveincomefortheyear

--

--

987,922,528

987,922,528


686,345,728

105,587,553

2,857,905,222

103,725,292

2,381,670,331

6,135,234,126


686,345,728

105,587,553

2,857,905,222

103,725,292

2,381,670,331

6,135,234,126

Cumulativeeffectofchangesinaccountingpolicy

foremployeebenefits-netdeferredtax

assets(Note3and5)

--

--

(9,856,943)

(9,856,943)


sharestosharecapital(Note23)

94,659,475

-652,183,807

--

746,843,282


transferredtosharecapitalduringtheyear

-(105,587,553)

--

-(105,587,553)

Dividendpaid(Note32)

--

--

(924,337,097)

(924,337,097)

Totalcomprehensiveincomefortheyear

--

--

441,098,451

441,098,451

Unappropriatedretainedearnings

transferredtostatutoryreserve

--

-8,000,000

(8,000,000)

-Balanceasat31December2011

781,005,203

-3,510,089,029

111,725,292

1,880,574,742

6,283,394,266

Theaccompanyingnotesareanintegralpartofthefinancialstatements.

TICONIndustrialConnectionPublicCom

panyLimitedanditssubsidiaries

Statementsofchangesinshareholders'equity(continued)

Fortheyearsended31December2011and2010

Separatefinancialstatements

Retainedearnings

TICON Industrial Connection Public Company Limited and its subsidiariesCash flow statementsFor the years ended 31 December 2011 and 2010

(Unit: Baht)Consolidated financial statements Separate financial statements

2011 2010 2011 2010Cash flows from operating activitiesProfit before tax 635,485,394 1,079,026,699 523,066,607 1,292,637,134Adjustments to reconcile profit before tax to net cashprovided by (paid from) operating activities:Depreciation and amortisation 303,188,277 265,172,583 153,167,197 161,023,250Allowance for doubtful accounts 111,679 4,918,623 111,679 4,918,623Dividend income from subsidiary - - (32,499,896) (17,499,944)Dividend income from associates - - (231,881,463) (205,042,013)Cost of properties sold 667,819,464 994,814,478 96,743,238 994,814,478Gain on sales/write-off of assets (350,406) (312,476) (675,240) (324,754)Allowance for impairment loss on investment propertiesunder development 15,420,000 - 15,420,000 -Gain from sales of investments in associates (2,565,000) (27,984,490) (1,995,000) (7,974,576)Provision for long-term employee benefits 2,532,997 - 2,086,033 -Share of income from investments in associates (160,801,083) (168,587,006) - -Realised additional gain on sales of properties toassociated company (3,519,425) (38,900,885) - -Deferred gain on sales of properties to associates 63,198,756 219,029,009 - -Interest income (12,061,206) (4,514,076) (103,070,254) (40,408,363)Interest expense 263,941,653 253,328,179 260,362,070 252,542,462

Income from operating activities beforechanges in operating assets and liabilities 1,772,401,100 2,575,990,638 680,834,971 2,434,686,297

Operating assets (increase) decreaseTrade and other receivables (66,677,571) (35,332,315) 73,941,361 (108,863,068)Other current assets (12,879,569) (28,092,679) (5,855,560) (12,158,226)Deposit for purchase property (256,052,260) - (102,756,210) -Other non-current assets (1,909,067) 4,859,983 (987,209) 98,478

Operating liabilities increase (decrease)Other payables 5,697,238 6,453,074 (11,913,980) 12,685,845Other current liabilities 4,225,389 (2,442,461) (363,885) (4,149,324)Customer deposits 128,042,291 2,978,224 64,851,151 (24,783,654)

Cash flows from operating activities 1,572,847,551 2,524,414,464 697,750,639 2,297,516,348Interest received 11,850,795 4,514,076 10,954,818 4,402,134Cash paid for interest expense (277,085,407) (241,131,111) (273,505,825) (240,345,394)Cash paid for corporate income tax (341,693,346) (78,629,757) (301,347,741) (73,695,104)

Net cash flows from operating activities 965,919,593 2,209,167,672 133,851,891 1,987,877,984


ANNUALREPORT

2011

88

TICON Industrial Connection Public Company Limited and its subsidiariesCash flow statements (continued)For the years ended 31 December 2011 and 2010

(Unit: Baht)Consolidated financial statements Separate financial statements

2011 2010 2011 2010Cash flows from investing activities

)375,136,842(375,136,842)375,136,842(375,136,842stnemtsevnitnerrucni)esaercni(esaerceD)617,685,135()853,482,732()617,685,135()853,482,732(setaicossanitnemtsevniniesaercnI)000,677,21()000,000,21(--yraidisbusnitnemtsevniniesaercnI042,336,544000,029,13042,336,544000,029,13setaicossanistnemtsevnifoelasmorfsdeecorP

(Increase) decrease in pledged deposits at financial institutions (29,579,240) 800,000 - -000,005,662001,406,342,1--yraidisbusotsnaolmret-gnolmorfdeviecerhsaC)001,008,174,1()058,675,789,2(--yraidisbusotsnaolmret-gnolrofdiaphsaC

Cash paid for acquisition of investment properties under development)940,112,814()164,464,517()439,489,937,1()679,092,981,3(elas/tnerrofelbaliavadna

Cash paid for acquisition property, plant and equipment (19,604,738) (6,190,257) (15,376,794) (3,913,697))108,012,2()354,684,2()293,583,2()719,949,2(erawtfosretupmocninoitisiuqcarofdiaphsaC000,007,43000,005,39--yraidisbusmorfemocnitseretnI449,994,71698,994,23--yraidisbusmorfdeviecerdnediviD310,240,502364,188,132310,240,502364,188,132setaicossamorfdeviecerdnediviD364,284558,789,2364,284604,875,2tnempiuqefoselasmorfsdeecorP538,790,2681,83--erawtfosretupmocfoselasmorfsdeecorP

Net cash flows used in investing activities (2,963,697,787) (1,876,821,156) (2,085,125,843) (1,717,174,441)Cash flows from financing activitiesIncrease (decrease) in short-term loans and

)353,482,851(140,083,815,1)353,482,851(140,083,406,1stpiecertsurtrednuseitilibail-000,000,082-000,006,855snaolmret-gnolmorfsdeecorP000,000,003,2000,000,000,2000,000,003,2000,000,000,2serutnebedfoecnaussimorfsdeecorP000,063,501000,002,631000,063,501000,002,631ytrapdetalermorfsnaolmret-gnolmorfsdeecorP)724,403,196()000,441,751()724,403,196()000,441,751(ytrapdetalermorfsnaolmret-gnolfotnemyapeR)562,797,744()000,000,082()309,844,105()000,006,855(snaolmret-gnolfotnemyapeR)000,000,005()000,000,000,1()000,000,005()000,000,000,1(serutnebedfonoitpmedeR484,744,023927,552,146484,744,023927,552,146noitpircsbuserahsmorfdeviecerhsaC)812,865,735()723,672,329()472,865,735()134,672,329(diapdnediviD

Net cash flows from financing activities 2,301,415,339 337,201,527 2,215,415,443 390,853,221--)414,604(877,812,1tnemtsujdanoitalsnartni)esaerced(esaercnI

Net increase in cash and cash equivalents 304,855,923 669,141,629 264,141,491 661,556,764819,655,09286,311,257480,138,211317,279,187raeyfogninnigebtastnelaviuqehsacdnahsaC

Cash and cash equivalents at end of year (Note 9) 1,086,828,636 781,972,713 1,016,255,173 752,113,682

Supplemental cash flows information: -Cash paid during the year for:

265,612,1995,522,21265,612,1548,884,21stessadetalerotdesilatipactseretnINon-cash items: -Transfer of investment properties under development and availablefor rent/sale and investment property for rent to be cost of sales

874,418,499832,347,69874,418,499926,470,666seitreporpfoTransfer of investment properties under development to property,

--161,400,405-tnempiuqednatnalpPurchase of investment properties for which no cash has been

285,528,64629,809,77704,870,611882,183,942diapAdjustment of provision for long-term employee benefits with

-349,658,9-173,084,11ten-gninraedeniaterfoecnalabgninnigebeht


ANNUALREPORT

2011

89

TICON Industrial Connection Public Company Limited and its subsidiariesNotes to consolidated financial statements

For the years ended 31 December 2011 and 2010

1. GENERAL INFORMATION

TICON Industrial Connection Public Company Limited (“the Company”) is a public company

incorporated and domiciled in Thailand. The Company and its subsidiaries are principally engaged

in industrial real estate development business, which comprises the development of factories and

warehouses, mainly for rent and occasionally for sale, and the provision of construction services.

.

The registered office of the Company is at No. 175 Sathorn City Tower, 13/1th Floor, South Sathorn

Road, Bangkok.

2. BASIS OF PREPARATION

2.1 The financial statements have been prepared in accordance with accounting standards

enunciated under the Accounting Profession Act B.E. 2547, except for the Thai Accounting

standard No. 12 regarding “Income Taxes” which the Company and subsidiaries had early

adopted before the date of enforcement.

The presentation has been made in compliance with the stipulations of the Notification of the

Department of Business Development dated 28 September 2011, issued under the

Accounting Act B.E. 2543.

The financial statements in Thai language are the official statutory financial statements of

the Company. The financial statements in English language have been translated from the

Thai language financial statements.

The financial statements have been prepared on a historical cost basis except where

otherwise disclosed in the accounting policies.

2.2 Basis of consolidation

a) The consolidated financial statements include the financial statements of TICON

Industrial Connection Public Company Limited (“the Company”) and the following

subsidiary companies (“the subsidiaries”):

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2011

90

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2011

91

Country of Percentage of

Company incorporation Nature of business Shareholding

2011 2010

(Percent) (Percent)

ECO Industrial Thailand Development of real 99.99 99.99

Services estate, development

Company Limited of factories for rent

TICON Logistics Thailand Development of real 99.99 99.99

Park Company estate, development

Limited of warehouse

for rent/sale

Shanghai TICON China Fund management 100.00 100.00

Investment

Management

Company Limited

On 19 July 2010, the Company established a wholly owned subsidiary in China named

Shanghai TICON Investment Management Company Limited, to explore new business

in China. The subsidiary has a registered share capital of USD 2 million and the

Company’s shareholding is 100 percent. The Company made first payment of share

capital, amounting to USD 0.4 million, or Baht 13 million, on 16 August 2010. On 2

September 2011, the Company made the second payment of share capital, amounting

to USD 0.4 million, or Baht 12 million. The share capital of that company was 40 percent

paid up.

b) Subsidiaries are fully consolidated, being the date on which the Company obtains

control, and continue to be consolidated until the date when such control ceases.

c) The financial statements of the subsidiaries are prepared using the same significant

accounting policies as the Company.

d) The assets and liabilities in the financial statements of oversea subsidiary company are

translated to Baht using the exchange rate prevailing on the end of reporting period,

and revenues and expenses translated using monthly average exchange rates. The

resulting differences are shown under the caption of “Exchange differences on

translation of financial statements in foreign currency” in the statements of changes in

shareholders’ equity.

e) Material balances and transactions between the Company and its subsidiary

companies have been eliminated from the consolidated financial statements.

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2011

92

f) Non-controlling interests represent the portion of profit or loss and net assets of the

subsidiaries that are not held by the Company and are presented separately in the

consolidated profit or loss and within equity in the consolidated statements of financial

position.

2.3 The separate financial statements, which present investments in subsidiaries and

associated company presented under the cost method, have been prepared solely for the

benefit of the public.

3. ADOPTION OF NEW ACCOUNTING STANDARDS DURING THE YEAR

During the current year, the Company adopted a number of revised and new accounting standards,

issued by the Federation of Accounting Professions, as listed below.

Accounting standards:

TAS 1 (revised 2009) Presentation of Financial Statements

TAS 2 (revised 2009) Inventories

TAS 7 (revised 2009) Statement of Cash Flows

TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and

Errors

TAS 10 (revised 2009) Events after the Reporting Period

TAS 11 (revised 2009) Construction Contracts

TAS 16 (revised 2009) Property, Plant and Equipment

TAS 17 (revised 2009) Leases

TAS 18 (revised 2009) Revenue

TAS 19 Employee Benefits

TAS 23 (revised 2009) Borrowing Costs

TAS 24 (revised 2009) Related Party Disclosures

TAS 26 Accounting and Reporting by Retirement Benefit Plans

TAS 27 (revised 2009) Consolidated and Separate Financial Statements

TAS 28 (revised 2009) Investments in Associates

TAS 29 Financial Reporting in Hyperinflationary Economies

TAS 31 (revised 2009) Interests in Joint Ventures

TAS 33 (revised 2009) Earnings per Share

TAS 34 (revised 2009) Interim Financial Reporting

TAS 36 (revised 2009) Impairment of Assets

TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets

TAS 38 (revised 2009) Intangible Assets

TAS 40 (revised 2009) Investment Property

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Financial reporting standards:

TFRS 2 Share-Based Payment

TFRS 3 (revised 2009) Business Combinations

TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued

Operations

TFRS 6 Exploration for and Evaluation of Mineral Resources

Financial Reporting Standard Interpretations:

TFRIC 15 Agreements for the Construction of Real Estate

Accounting Standard Interpretations:

SIC 31 Revenue-Barter Transactions Involving Advertising Services

These accounting standards do not have any significant impact on the financial statements, except

for the following accounting standard.

TAS 19 Employee Benefits

This accounting standard requires employee benefits to be recognised as expense in the period in

which the service is performed by the employee. In particular, an entity has to evaluate and make a

provision for post-employment benefits using actuarial techniques. The Company and its

subsidiaries previously accounted for such employee benefits when they were incurred.

The Company and its subsidiaries have changed this accounting policy in the current year and

recognise the liability in the transition period through an adjustment to the beginning balance of

retained earnings in the current year. The change has the effect of decreasing the profit of the

Company and its subsidiaries for the year 2011 by Baht 3 million, (0.003 Baht per share) (Separate

financial statements: decreasing profit by Baht 2 million, or 0.003 Baht per share). The cumulative

effect of the changes in the accounting policy has been presented in Note 5 to the financial

statements.

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4. NEW ACCOUNTING STANDARDS ISSUED DURING THE YEARS NOT YETEFFECTIVE

The Federation of Accounting Professions issued the following new/revised accounting standards

that are effective for fiscal years beginning on or after 1 January 2013.

Accounting standards:

TAS 12 Income Taxes

TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of

Government Assistance

TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates

Accounting Standard Interpretations:

SIC 10 Government Assistance - No Specific Relation to Operating Activities

SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets

SIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

The Company’s management believes that these accounting standards will not have any

significant impact on the financial statements for the year when they are initially applied.

5. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY DUE TO THEADOPTION OF NEW ACCOUNTING STANDARD

During the current year, the Company and its subsidiaries changed its significant accounting

policy, described in Note 3 to the financial statements, as a result of the adoption of revised and

new accounting standards. The change in this accounting policy has the effect of decreasing the

beginning balance of consolidated retained earnings by Baht 11 million (Separate financial

statements: decreasing retained earnings by Baht 10 million), net of deferred tax assets of Baht 5

million (Separate financial statements: Baht 4 million). The cumulative effect of the change in the

accounting policy has been separately presented in the statements of changes in shareholders’

equity.

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2011

95

6. SIGNIFICANT ACCOUNTING POLICIES

6.1 Revenue recognition

Sales

Sales are recognised in full when the Company has transferred the significant risks and

rewards of ownership to the buyer.

Rental and related service income

Rental and related service income are recognised as revenue in profit and loss on a straight

line basis over the lease term. The recognised revenue which is not yet due per the

operating lease agreements has been presented under the caption of “Unbilled operating

leases receivables” at the end of reporting period.

Revenues from construction services

Revenues from construction services are recognised based on percentage of completion

method. The percentage of completion measured by the proportion of actual development

costs incurred up to the end of the period and the total anticipated development cost to be

incurred to completion.

Dividends

Dividends are recognised when the right to receive the dividends is established.

Interest income

Interest income is recognised on an accrual basis based on the effective interest rate.

6.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid

investments with an original maturity of three months or less and not subject to withdrawal

restrictions.

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2011

96

6.3 Trade accounts receivable

Trade accounts receivable are stated at the net realisable value. Allowance for doubtful

accounts is provided for the estimated losses that may be incurred in the collection of

receivables. The allowance is generally based on collection experience and analysis of debt

aging.

6.4 Investments

a) Investments in debt securities, both due within one year and expected to be held to

maturity, are recorded at amortised cost. The premium/discount on debt securities is

amortised/accreted by the effective rate method with the amortised/accreted amount

presented as an adjustment to the interest income.

b) Investments in non-marketable equity securities, which the Company classifies as other

investments, are stated at cost net of allowance for loss on diminution in value (if any).

c) Investments in associates are accounted for in the consolidated financial statements

using the equity method.

d) Investments in subsidiaries and associates are accounted for in the separate financial

statements using the cost method.

The weighted average method is used for computation of the cost of investments.

On disposal of an investment, the difference between net disposal proceeds and the carrying

amount of the investment is recognised in profit or loss.

6.5 Investment properties

Investment properties are measured initially at cost, including transaction costs. Subsequent

to initial recognition, investment properties are stated at cost less accumulated depreciation

and allowance for loss on impairment (if any).

Depreciation of investment properties is calculated by reference to their costs on the straight-

line basis over estimated useful lives of 20 years. Depreciation of the investment properties

is included in determining income.

On disposal of investment properties, the difference between the net disposal proceeds and

the carrying amount of the asset is recognised in profit or loss in the period when the asset is

derecognised.

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6.6 Property plant and equipment/depreciation

Land is stated cost. Buildings and equipment are stated at cost less accumulated

depreciation and allowance for loss on impairment of assets (if any).

Depreciation of buildings and equipment is calculated by reference to their costs on the

straight-line basis over the following estimated useful lives:

Buildings 20 years

Land improvement 20 years

Others 5 years

Depreciation is included in determining income.

No depreciation is provided on land and construction in progress.

An item of property, plant and equipment is derecognised upon disposal or when no future

economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of

an asset is included in profit or loss when the asset is derecognised.

6.7 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an

asset that necessarily takes a substantial period of time to get ready for its intended use or

sale are capitalised as part of the cost of the respective assets. All other borrowing costs

are expensed in the period they are incurred. Borrowing costs consist of interest and other

costs that an entity incurs in connection with the borrowing of funds.

6.8 Intangible assets

Intangible assets acquired intangible assets are measured at cost. Following initial

recognition, intangible assets are carried at cost less any accumulated amortisation and any

accumulated impairment losses.

Intangible assets with finite lives are amortised on a systematic basis over the economic

useful life and tested for impairment whenever there is an indication that the intangible asset

may be impaired. The amortisation period and the amortisation method of such intangible

assets are reviewed at least at each financial year end. The amortisation expense is

charged to profit and loss.

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2011

98

A summary of the intangible assets with finite useful lives is as follows:

Useful lives

Computer software 3 and 5 years

6.9 Related party transactions

Related parties comprise enterprises and individuals that control, or are controlled by, the

Company, whether directly or indirectly, or which are under common control with the

Company.

They also include associated companies and individuals which directly or indirectly own a

voting interest in the Company that gives them significant influence over the Company, key

management personnel, directors, and officers with authority in the planning and direction of

the Company’s operations.

6.10 Long-term agreement

The Company and its subsidiaries as a lessor.

Leases which the Company and its subsidiaries transfer substantially all the risks and

rewards of ownership are classified as finance leases. Amounts due from leasees under

financial leases are recorded as receivables at the amount of the Company and its

subsidiaries’ net investment in leases. Finance lease income is allocated to accounting

periods to reflect a constant periodic rate of return on the Company and its subsidiaries’ net

investment outstanding in respect of the leases.

Lease of assets not transferred a significant portion of risks and rewards of ownership to

lessee are classified as operating leases. Operating lease income is recognised in profit

and loss on a straight line basis over the lease term.

6.11 Foreign currencies

Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the

date of the transaction. Monetary assets and liabilities denominated in foreign currencies are

translated into Baht at the exchange rate ruling at the end of reporting period.

Gains and losses on exchange are included in determining income.

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2011

99

6.12 Impairment of assets

At the end of each reporting period, the Company performs impairment reviews in respect

of the property, plant and equipment or intangible assets whenever events or changes in

circumstances indicate that an asset may be impaired. An impairment loss is recognised

when the recoverable amount of an asset, which is the higher of the asset’s fair value less

costs to sell and its value in use, is less than the carrying amount. In determining value in

use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the

risks specific to the asset. In determining fair value less costs to sell, an appropriate

valuation model is used. These calculations are corroborated by a valuation model that,

based on information available, reflects the amount that the Company could obtain from the

disposal of the asset in an arm’s length transaction between knowledgeable, willing parties,

after deducting the costs of disposal.

An impairment loss is recognised in profit and loss.

6.13 Employee benefits

Short-term employee benefits

Salaries, wages, bonuses and contributable to the social security fund are recognised as

expenses when incurred.

Post-employment benefits

Defined contribution plans

The Company and its employees have jointly established a provident fund. The fund is monthly

contributed by employees and by the Company. The fund’s assets are held in a separate trust

fund and the Company’s contributions are recognised as expenses when incurred.

Defined benefit plans

The Company has obligations in respect of the severance payments it must make to

employees upon retirement under labor law. The Company treats these severance payment

obligations as a defined benefit plan.

The obligation under the defined benefit plan is determined by a professionally qualified

independent actuary based on actuarial techniques, using the projected unit credit method.

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2011

100

Actuarial gains and losses arising from post-employment benefits are recognized

immediately in profit and loss.

For the first-time adoption of TAS 19 Employee Benefits, the Company elected to recognise

the transitional liability, which exceeds the liability that would have been recognised at the

same date under the previous accounting policy, through an adjustment to the beginning

balance of retained earnings in the current year.

6.14 Provisions

Provisions are recognised when the Company has a present obligation as a result of a past

event, it is probable that an outflow of resources embodying economic benefits will be

required to settle the obligation, and a reliable estimate can be made of the amount of the

obligation.

6.15 Income tax

Income tax expense represents the sum of corporate income tax currently payable and

deferred tax.

Current tax

Current income tax is provided in the accounts at the amount expected to be paid to the

taxation authorities, based on taxable profits determined in accordance with tax legislation.

Deferred tax

Deferred income tax is provided on temporary differences between the tax bases of assets

and liabilities and their carrying amounts at the end of each reporting period, using the tax

rates enacted at the end of the reporting period.

The Company recognises deferred tax liabilities for all taxable temporary differences while it

recognises deferred tax assets for all deductible temporary differences and tax losses

carried forward to the extent that it is probable that future taxable profit will be available

against which such deductible temporary differences and tax losses carried forward can be

utilized.

At each reporting date, the Company reviews and reduces the carrying amount of deferred

tax assets to the extent that it is no longer probable that sufficient taxable profit will be

available to allow all or part of the deferred tax asset to be utilised.

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2011

101

The Company records deferred tax directly to shareholders' equity if the tax relates to items

that are recorded directly to shareholders' equity.

7. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles

at times requires management to make subjective judgments and estimates regarding matters that

are inherently uncertain. These judgments and estimates affect reported amounts and disclosures,

and actual results could differ from these estimates. Significant judgments and estimates are as

follows:

Leases

In determining whether a lease is to be classified as an operating lease or finance lease, the

management is required to use judgment regarding whether significant risk and rewards of

ownership of the leased asset have been transferred, taking into consideration terms and

conditions of the arrangement.

Allowance for doubtful accounts

In determining an allowance for doubtful accounts, the management needs to make judgement and

estimates based upon, among other things, past collection history, aging profile of outstanding

debts and the prevailing economic condition.

Fair value of financial instruments

In determining the fair value of financial instruments that are not actively traded and for which

quoted market prices are not readily available, the management exercise judgment, using a variety

of valuation techniques and models. The input to these models is taken from observable markets,

and includes consideration of liquidity, correlation and longer-term volatility of financial instruments.

Impairment of securities investments

The Company treats available-for-sale investments and other investments as impaired when there

has been a significant or prolonged decline in the fair value below their cost or where other

objective evidence of impairment exists. The determination of what is “significant” or “prolonged”

requires judgment of the management.

ANNUALREPORT

2011

102

Impairment of investment in subsidiaries and associates

The Company treats investment in subsidiaries and associates as impaired when there has been a

significant or prolonged decline in the fair value below their cost or where other objective evidence

of impairment exists. The determination of what is “significant” or “prolonged” requires judgement

of the management.

Investment properties for rent/sale, Investment properties for rent, and property plant andequipment/ depreciation

In determining depreciation of Investment properties available for rent/sale, Investment properties

for rent, and plant and equipment, the management is required to make estimates of the useful

lives and residual values of the Company’s Investment properties available for rent/sale,

Investment properties for rent, and plant and equipment and to review estimate useful lives and

residual values when there are any changes.

In addition, the management is required to review property available for rent/sale, property for rent,

and property, plant and equipment for impairment on a periodical basis and record impairment

losses in the period when it is determined that their recoverable amount is lower than the carrying

amount. This requires judgments regarding forecast of future revenues and expenses relating to

the assets subject to the review.

Deferred tax assets

Deferred tax assets are recognised in respect of temporary differences only to the extent that it is

probable that taxable profit will be available against which these differences can be utilized.

Significant management judgment is required to determine the amount of deferred tax assets that

can be recognized, based upon the likely timing and level of estimate future profits.

Post-employment benefits under defined benefit plans

The obligation under the defined benefit plan is determined based on actuarial techniques. Such

determination is made based on various assumptions, including discount rate, future salary

increase rate, mortality rate and staff turnover rate.

ANNUALREPORT

2011

103

8. RELATED PARTY TRANSACTIONS

During the years, the Company and its subsidiaries had significant business transactions with

related parties. Such transactions, which are summarised below, arose in the ordinary course of

business and were concluded on commercial terms and bases agreed upon between the Company

and those related parties.

(Unit: Million Baht)

Consolidated

financial statements

Separate

financial statements Transfer Pricing Policy

2011 2010 2011 2010

Transactions with subsidiaries

(eliminated from the consolidated financial statements)

Sales of land - - 49 - Closed to appraisal value

Management fee income - - 1 4 2% of rental and service income of

subsidiaries

Construction fee income - - 4 5 2% of construction expense of

subsidiary which occurred during

the year

Interest income - - 92 36 MLR of a related bank and the

average interest rate of

debentures issued during the third

quarter of 2010 plus certain rate

Dividend income - - 32 17 As declared

Land rental income - - 5 5 4% of acquired cost

Sales of computer program - - - 2 Net book value

Revenues from construction services - - - 1 Contract amount

Management fee - - 5 5 3% of rental and service income of

associated

Transactions with associates

Sales of land and factory buildings - 1,738 - 1,738 Close to appraisal value as

mentioned in Note 14.2

Management fee income from

TICON Property Fund

91 90 91 90 4% of rental and service of the

associates, plus an incentive fee

of 0 - 19.5% of gross operating

profit, by lease commission for

2 months of rental and service

fee and by sales at maximum of

3 percent of sales value

Management fee income from

TPARK Logistics Property Fund

20 15 20 15 55% of the gross rental and service

fees of the associates less the

guaranteed amount, direct

expense in relation to the

property management and other

reserve until the end of year

2016. After that 3% of the gross

rentals and services plus

incentive fees computed at rate

between 0%-10% of gross

operating profit.

Assurance for rental and service

income

- 1 - 1 Normal commercial price

Dividend income - - 232 205 As declared

Revenues from construction services 2 2 2 2 Contract amount

ANNUALREPORT

2011

104

ANNUALREPORT

2011

105

As at 31 December 2011 and 2010, the balance of accounts between the Company and those

related companies are as follows:

(Unit: Thousand Baht)


2011 2010 2011 2010

Cash at bank (presented under cash and cash equivalents)Related companies (related by close family

member of a director of the Company) 117,095 154,530 60,893 134,003

Current investmentsRelated companies (related by close family

member of a director of the Company) 350,000 - 350,000 -

Other receivables - related parties (Note 11)Subsidiaries - - 3,265 96,291

Associated companies 5,837 14,396 5,305 13,500

Total 5,837 14,396 8,570 109,791

Interest receivables (presented under tradeand other receivables) (Note 11)Subsidiaries - - 76 1,671

Related companies (related by close family

member of a director of the Company) 57 - 57 -

Total 57 - 133 1,671

Other advance (presented under othercurrent assets)Associated companies 3,587 - 3,587 -

Pledged deposits at financial institutionsRelated companies (related by close family

member of a director of the Company) 40,438 10,859 128 128

Long-term loans to related party

Subsidiaries - - 3,141,068 1,397,095

Deposit for purchase propertyRelated companies (Shareholder /

Co-Director) 12,825 - 12,825 -

Refundable deposits (presented underother non-current assets)Related companies (related by Common

shareholder) 3,705 3,705 3,705 3,705

Other payables - related parties (Note 19)Subsidiaries - - 2,142 8,241

Associated companies - 315 - 315

Total - 315 2,142 8,556

ANNUALREPORT

2011

106



2011 2010 2011 2010Interest payable (presented undertrade and other payables) (Note 19)Relate companies (relatedbyclose

family member of adirector of the Company) 142 126 142 126

Accrued expenses (presented underTrade and other payables) (Note 19)Related companies (Common shareholder) 98 106 98 106

Related companie (related by close family)

Member of a director of the Company 1,605 - 1,605 -

307,1latoT 106 1,703 106

Unearned land rental income (presented underother current liabilities)

-seiraidisbuS - 3,281 3,281

Unearned equipment rental income (presented underother current liabilities)

-seiraidisbuS - 139 105

Short-term loans from related partyRelated company (related by close family

member of a director of the Company) 100,000 - 100,000 -

Long-term loans from related partyRelated company (related by close family

member of a director of the Company)874,120,1435,000,1874,120,1435,000,1snaolmret-gnoL

Less: Current portion of long-term loans (239,144) (157,144) (239,144) (157,144)

093,167ten,snaolmret-gnoL 864,334 761,390 864,334

ANNUALREPORT

2011

107

As at 31 December 2011 and 2010, the balance of loans between the Company and those related

companies and the movement are as follows:


Consolidated financial statements

Balance as at Increase Decrease Balance as at31 December 2010 during the year during the year 31 December 2011

Short-term loans fromBangkok Bank Public Co., Ltd. - 100,000 - 100,000

Long-term loans fromBangkok Bank Public Co., Ltd.Long-term loans 1,021,478 136,200 (157,144) 1,000,534Less: Current portion of long-

term loans (157,144) (239,144) 157,144 (239,144)

Long-term loans, net 864,334 (102,944) - 761,390


Separate financial statements

Balance as at Increase Decrease Balance as at31 December 2010 during the year during the year 31 December 2011

Long-term loans toTICON Logistic Park Co., Ltd. 1,397,095 2,987,577 (1,243,604) 3,141,068

Short-term loans fromEco IndustrialServices Co., Ltd. - 5,000 (5,000) -

Bangkok Bank Public Co., Ltd. - 100,000 - 100,000

- 105,000 (5,000) 100,000

Long-term loans fromBangkok Bank Public Co., Ltd.Long-term loans 1,021,478 136,200 (157,144) 1,000,534Less: Current portion of long-

term loans (157,144) (239,144) 157,144 (239,144)

Long-term loans, net 864,334 (102,944) - 761,390

As at 31 December 2011, long-term loan of Baht 3,141 million (2010: Baht 1,397 million) is

unsecured loan to TICON Logistics Park Company Limited (Subsidiary) and carries interest at a

rate of 4.35 percent per annum (2010: 4.42 percent per annum).

ANNUALREPORT

2011

108

The outstanding long-term loans obtained from a financial institution, which is also a related

company, are as follows:


Consolidated and

Separate financial

statements Principle conditions

Repayment

Loans Contract date 2011 2010 Period Schedule Installment period Interest rate

1. 21 January 2009 136 - 8 years Every 6 months November 2012 - May 2017 MLR minus certain rate

2. 11 May 2009 864 1,021 8 years Every 6 months November 2010 - May 2017 First 3 years fixed rate

after first 3 years MLR

minus certain rate

Total 1,000 1,021

Less: Current portion (239) (157)

Long term loans, net 761 864

As at 31 December 2011, part of the investment properties under development and available for

rent/sale and investment properties for rent of the Company with a net book value of Baht 1,849

million (2010: Baht 1,776 million) and certain of the Company’s investment units in TICON Property

Fund with a value under the equity method amounting to Baht 329 million (2010: Baht 342 million)

has been pledged as collateral for long-term loans.

As at 31 December 2011, there were available long-term loan facilities from related party which had

not yet been drawn down by the Company and its subsidiary of approximately Baht 174 million

(2010: Baht 1,333 million).

The loan agreements contain covenants as specified in the agreements that, among other things,

require the Company to maintain certain debt to equity according to the agreements.

Directors and management’s remuneration

During the year ended 31 December 2011 and 2010, the Company and its subsidiaries had

employee benefit expenses payable to their directors and management as below.

ANNUALREPORT

2011

109

(Unit: Thousand Baht)Consolidated financial

statementsSeparate financial

statements

2011 2010 2011 2010Short-term employee benefits 36,531 38,039 29,332 33,829Post-employment benefits 1,198 - 919 -

Total 37,729 38,039 30,251 33,829

Guarantee obligations with subsidiaries

The Company had outstanding guarantees with its subsidiaries as described in Note 20 and 33.3

to the financial statements.

9. STATEMENT OF CASH FLOWS

For the purpose of the statements of cash flows, cash and cash equivalents include cash in hand

and at financial institutions and current investments with an original maturity of 3 months or less.

Cash and cash equivalents as reflected in the statements of cash flows consist of the followings:


Consolidated Separatefinancial statements financial statements

2011 2010 2011 2010Cash 365 375 210 195Deposits at financial institutions 136,464 182,859 66,045 153,180

Cash and cash equivalents 136,829 183,234 66,255 153,375Current investments -Government bond and notewith an original maturity of3 months or less 950,000 598,739 950,000 598,739

Cash and cash equivalents instatements of cash flows 1,086,829 781,973 1,016,255 752,114

As at 31 December 2011, bank deposits in saving accounts, fixed deposits and current investment

with an original maturity of 3 months or less carried interests between 0.5 and 3.1 percent

per annum (2010: between 0.5 and 1.9 percent per annum).

ANNUALREPORT

2011

110

10. CURRENT INVESTMENTS


etarapeSdetadilosnoC

financial statements financial statements

2011 2010 2011 2010

Held to maturity debt security

due within one year

049,911-049,911-sllibyrusaerT

-000,059-000,059segnahcxefolliB

-sdnobtnemnrevoG 727,430 - 727,430

Total current investments 950,000 847,370 950,000 847,370

11. TRADE AND OTHER RECEIVABLES



statements

2011 2010 2011 2010Trade receivables - unrelated partiesAged on the basis of due datesPast due

765,7829,02706,01648,23shtnom3otpU274,3263,3274,3033,4shtnom6-

-36 819-819032,3shtnom21

649,4shtnom21revO 3,858 4,946 3,858518,51632,92558,81253,54latoT

Unbilled operating leases receivables 57,909 12,787 26,623 8,314Less: Allowance for doubtful debts (5,272) (5,160) (5,272) (5,160)Total trade receivables - unrelated

989,79ten,seitrap 26,482 50,587 18,969Other receivablesOther receivables - related parties 5,837 14,396 8,570 109,791Other receivables - unrelated parties 1,734 488 278 290Interest receivable - related party 57 - 133 1,671Interest receivable - unrelated parties 153 - 153 -

621,1emocnideurccA 226 443 202709,8selbaviecerrehtO 15,110 9,577 111,954

Trade and other receivables - net 106,896 41,592 60,164 130,923

ANNUALREPORT

2011

111

The balance of trade accounts receivable are classified by type of business as follows:


Consolidatedfinancial statements

Separatefinancial statements

Type of accounts receivable 2011 2010 2011 2010

Accounts receivable from rental and727,81012,34042,62991,09secivres

Accounts receivable fromconstruction services 7,790 242 7,377 242

97,989 26,482 50,587 18,969

12. PLEDGED DEPOSITS AT FINANCIAL INSTITUTION

As at 31 December 2011, the Company and its subsidiaries have deposits at financial institutions

of Baht 40 million (2010: Baht 11 million) which are pledged with certain banks as collateral for

open letter of credit and trust receipt credit lines together with pre-settlement risk lines and letters

of guarantees issued by banks in favor of a government entity, a state enterprise and private

companies.

13. INVESTMENTS IN SUBSIDIARIES

Details of investments in subsidiaries as presented in separate financial statements are as follows:

Nature of business



Company Paid-up capital

Shareholding

percentage Cost

Dividend received

during the year

2011 2010 2011 2010 2011 2010 2011 2010

(%) (%)

ECO Industrial Services Development of real estate,

Company Limited development of factories

005,71005,23000,05000,0599.9999.99000,05000,05tnerrof

TICON Logistics Park Development of real estate,

Company Limited development of warehouses

for rent/sale 2,500,000 2,500,000 99.99 99.99 2,515,000 2,515,000 - -

Shanghai TICON Fund management

Investment

Management

Company Limited(a) 24,776 12,776 100.00 100.00 24,776 12,776 - -

Total investments in subsidiaries 2,589,776 2,577,776 32,500 17,500

(a) Audited by other auditor

ANNUALREPORT

2011

112

During the year 2011, there have been changes of investments in subsidiaries as follows: -

(a) On 12 January 2011, the meeting of the Board of Directors No. 1/2011 of ECO Industrial

Services Company Limited, a subsidiary, approved an interim dividend payment to the

shareholders of Baht 1.5 per share from the net profit under tax privileges of the year 2002

and 2003. The dividend, totaling Baht 7.5 million, was paid on 17 January 2011.

(b) On 8 March 2011, the meeting of the Board of Directors No. 2/2011 of ECO Industrial

Services Company Limited, a subsidiary, approved an interim dividend payment

(a second time) to the shareholders of Baht 1.5 per share from the net profit under tax

privileges of the year 2003. The dividend, totaling Baht 7.5 million, was paid on 15 March

2011.

(c) On 25 July 2011, the meeting of the Board of Directors No. 3/2011 of ECO Industrial

Services Company Limited, a subsidiary, approved an interim dividend payment (a third

time) to the shareholders of Baht 2.0 per share from the net profit under tax privileges of the

year 2003 and 2005-2009. The dividend, totaling Baht 10 million, was paid on 1 August

2011.

(d) On 27 October 2011, the meeting of the Company’s Board of Directors No. 4/2011 of ECO

Industrial Services Company Limited, a subsidiary, approved an interim dividend payment (a

fourth time) to the shareholders of Baht 1.5 per share from the net profit under tax privileges

of the year 2009 and 2010. The dividend, totaling Baht 7.5 million, was paid on 28 October

2011.

(e) On 2 November 2011, the meeting of the Company’s Board of Directors No. 7/2011

approved the Company made the second payment of share capital of Shanghai TICON

Investment Management Company Limited, amounting to USD 0.4 million, or Baht 12

million. The Company’s shareholding is 100 percent, meaning the share capital of that

company was 40 percent paid up on 2 September 2011 however the Company has already

paid on 2 September 2011. Shanghai TICON Investment Management Company Limited

registered the increase of its capital on 10 November 2011.

During the year 2010, there have been changes of investments in subsidiaries as follows: -

(a) On 20 April 2010, the meeting of the Annual General Meeting’s of the shareholders of ECO

Industrial Services Company Limited passed a resolution to approve the dividend payment of

Baht 1.0 per share, totaling Baht 5 million, which was paid on 21 April 2010.

(b) On 19 July 2010, the Company established a wholly owned subsidiary in China named

Shanghai TICON Investment Management Company Limited, to explore new business in

ANNUALREPORT

2011

113

China. The subsidiary has a registered share capital of USD 2 million and the Company’s

shareholding is 100 percent. The Company made first payment of share capital, amounting

to USD 0.4 million, or Baht 13 million, on 16 August 2010.

(c) On 5 October 2010, the meeting of the Board of Directors No. 2/2010 of ECO Industrial

Services Company Limited, a subsidiary, approved a dividend payment to the shareholders

of Baht 2.5 per share from the net profit under tax privileges of the year 2005. The dividend,

totaling Baht 13 million, was paid on 7 October 2010.

14. INVESTMENTS IN ASSOCIATES

14.1 Details of associates:

Number of Percentage owned

Country of Paid up Capital Investment Units by the Company

Company Nature of business incorporation 2011 2010 2011 2010 2011 2010

(Thousand Baht) (Thousand Unit) (Percent)

TICON Property Fund Investing in properties Thailand 9,486,973 9,486,973 258,989 258,989 28.02 28.02

TPARK Logistics

Property Fund Investing in properties Thailand 2,468,046 1,533,000 48,535 30,134 20.43 19.66



Share of income

Carrying amounts based on from investments in Carrying amounts based on Dividend received

Company equity method associates during the year cost method during the year

2011 2010 2011 2010 2011 2010 2011 2010

TICON Property Fund 2,504,410 2,568,221 143,381 150,933 2,670,203 2,670,203 207,191 184,855

Less: Deferred gain on sales

of properties (955,796) (955,796) - - - - - -

Investments in TICON

Property Fund - net 1,548,614 1,612,425 143,381 150,933 2,670,203 2,670,203 207,191 184,855

TPARK Logistics

Property Fund 501,374 300,715 17,420 17,654 509,255 301,896 24,690 20,187

Less: Deferred gain on sales

of properties (152,109) (92,430) - - - - - -

Investments in TPARK

Logistics Property Fund - net 349,265 208,285 17,420 17,654 509,255 301,896 24,690 20,187

Investments in associates, net 1,897,879 1,820,710 160,801 168,587 3,179,458 2,972,099 231,881 205,042

Unit price of investment in

TICON Property Fund (Baht) 5.98 6.23 0.55 0.58 10.31 10.31 0.80 0.71

TPARK Logistics Property

Fund (Baht) 7.20 6.91 0.36 0.59 10.49 10.02 0.51 0.67

ANNUALREPORT

2011

114

As at 31 December 2010, the Company’s holding in TPARK Logistics Property Fund (“the Fund”) is

19.66 percent of units. However, the Company is the Property management of the Fund and

therefore, presented investment in the Fund as investment in an associate.

14.2 Movements of investments in associates during the years 2011 and 2010 are summarised

below.

(Unit: Million Baht)Consolidated financial


statements2011 2010 2011 2010

Investment in associatesBalance at beginning of year 2,869 2,791 2,972 2,878Purchases of investment 237 532 237 532Sales of investment (30) (418) (30) (438)Share of income 161 169 - -Dividend received (232) (205) - -Balance at end of year 3,005 2,869 3,179 2,972

(Unit: Million Baht)Consolidated financial


statements2011 2010 2011 2010

Deferred gains on sales of propertiesBalance at beginning of year 1,048 868Increase during the year 63 219Decrease during the year (4) (39)Balance at end of year 1,107 1,048

Investments in associates, net 1,898 1,821

The Company recorded the gain on sales of land, factory and warehouse buildings to the Funds in

the income statements and treated part of the gains, in proportion to its investment in the TICON

Property Fund or TPARK Logistics Property Fund, as an deferred gain. This was presented as a

separate item in the income statements, under the caption “Deferred gains on sales of properties

to associates”. Movements of deferred gains on sales of properties to associates during the years

2011 and 2010 are summarised below.

Date

Transactions

during the year 2011

Number of land

and buildings/

number of

investment units Sale price

Increase (decrease) in deferred gains

on sales of properties in proportion to

investment in the Funds

(Million Baht) (Million Baht)

Sales of properties to TPARK Logistics Property Fund29 September 2011 The subsidiary sold land and

warehouses 12 warehouses 944 63 *

Sales of investment in associate to unrelated parties18 November 2011 Sales of investment in

TPARK Logistics Property

Fund 3 million units 32 (4)

ANNUALREPORT

2011

115

Date

Transactions

during the year 2010

Number of land

and buildings/

number of

investment units Sale price

Increase (decrease) in deferred gains

on sales of properties in proportion to

investment in the Funds

(Million Baht) (Million Baht)

Sales of properties to TICON Property Fund

25 March 2010 The Company sold land and

**613yrotcaf1yrotcaf

14 October 2010 The Company sold land and

312707,1seirotcaf53yrotcaf ***

219

Sales of TICON Property Fund’s properties to unrelated parties

24 February 2010 TICON Property Fund sold land

and a factory that was

purchased from the

)3(72yrotcaf1ytrapdrihtotynapmoC

Sales of investment in associate to unrelated parties

23 April - Sales of investment in TICON

)63(944stinunoillim34dnuFytreporP0102rebmetpeS2

(39)

* The fair values of the land and warehouses building as appraised using the income approach method by two independent valuers

totaled Baht 910 million and Baht 953 million.

** The fair values of the land and factory building as appraised using the income approach method by two independent valuers totaled Baht

29 million and Baht 31 million.

*** The fair values of the land and factory building as appraised using the income approach method by two independent valuers totaled Baht

1,704 million and Baht 1,713 million.

14.3 Summarised financial information of associates


Company

Paid-up capital as at

31 December

Total assets as at

31 December

Total liabilities as at

31 December

Total revenues

for the year ended

31 December

Profit for the year

ended

31 December

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

TICON Property Fund 9,487 9,487 10,177 10,356 349 304 841 785 515 699

TPARK Logistics

Property Fund(a) 2,468 1,533 2,621 1,629 55 26 170 166 151 164

(a) Financial statements for the year 2010 were audited by other auditor

ANNUALREPORT

2011

116

a) On 29 September 2011, TPARK Logistics Property Fund (“the Fund”) issued an

additional 84 million investment units at an offer price of Baht 11.1 each, bringing the

value of the Fund’s registered investment units to Baht 2,468 million in total. The

Company acquired 19 million of the additional investment units at a total cost of Baht

209 million.

b) During November 2011, the Company sold 3 million fund units with a selling price of

Baht 11.2 each, or a total of Baht 32 million. As a result, the Company’s holding in

TPARK Logistics Property Fund has decreased from 21.63 percent to 20.43 percent of

units.

c) On 14 October 2010, the TICON Property Fund issued an additional 164 million

investment units at an offer price of Baht 10.5 each, bringing the value of the Fund’s

registered investment units to Baht 9,487 million in total. The Company acquired 50

million of the additional investment units at a total cost of Baht 526 million.

14.4 Fair value investments in listed associates

In respect of investments in associated companies that are listed companies on the Stock

Exchange of Thailand, their fair values are as follows:

Fair value per unit

Company’s name Fair values as at 31 December as at 31 December

2011 2010 2011 2010

(Million Baht) (Million Baht) (Baht) (Baht)

TICON Property Fund 2,719 3,030 10.5 11.7

TPARK Logistics Property Fund 534 344 11.0 11.4

352,3latoT 3,374

14.5 As at 31 December 2011, the Company’s investment units in TICON Property Fund of 170

million units (2010: 68 million units) with a value under the equity method amounting to Baht

1,014 million (2010: Baht 423 million) are pledged with a bank as collateral for short-term

loans and long-term loans. In addition, the Company’s investment units in the TPARK

Logistics Property Fund of 22 million units (2010: 15 million units) with a value under the

equity method amounting to Baht 160 million (2010: 104 million) are pledged with a bank as

collateral for guarantee of lease and service incomes, as discussed in Note 33.5.

ANNUALREPORT

2011

117

15. INVESTMENT PROPERTIES

15.1 Investment properties under development and available for rent/sale



Investment properties under development Investment properties available for rent/sale

Factory and

esuoherawdnaldnadnaLnoitcurtsnoCdnaldnadnaL

improvement in progress Total improvement building Total Grand total

Cost

1 January 2010 2,358,076 594,717 2,952,793 649,228 1,345,511 1,994,739 4,947,532

449,207,1---449,207,1164,798384,508esahcruP

)658,17()654,32()675,41()088,8()004,84(-)004,84(lasopsiD

)271,707,1()782,011()402,32()380,78()588,695,1()936,398()642,307(tuo/nirefsnarT

-tseretnidesilatipaC 1,216 1,216 - - - 1,216

31 December 2010 2,411,913 599,755 3,011,668 553,265 1,307,731 1,860,996 4,872,664

852,313,3---852,313,3859,029,1003,293,1esahcruP

)284,254,3()914,252,1()669,409()354,743()360,002,2()583,536,1()876,465(tuo/nirefsnarT

Capitalised interest 1,526 10,963 12,489 - - - 12,489

31 December 2011 3,241,061 896,291 4,137,352 205,812 402,765 608,577 4,745,929

Accumulated depreciation

338,941773,641773,641-654,3-654,30102yraunaJ1

Depreciation for the year - - - - 60,525 60,525 60,525

Depreciation on disposal - - - - (2,212) (2,212) (2,212)

)654,3(tuo/nirefsnarT - (3,456) - (74,182) (74,182) (77,638)

805,031805,031805,031----0102rebmeceD13


-tuo/nirefsnarT - - - (113,644) (113,644) (113,644)

-1102rebmeceD13 - - - 56,122 56,122 56,122

Allowance for impairment loss

-------0102rebmeceD13

Increase during the year 15,420 - 15,420 - - - 15,420

31 December 2011 15,420 - 15,420 - - - 15,420

Net book value

31 December 2010 2,411,913 599,755 3,011,668 553,265 1,177,223 1,730,488 4,742,156

31 December 2011 3,225,641 896,291 4,121,932 205,812 346,643 552,455 4,674,387

Depreciation for the year (included in administrative expenses)

2010 60,525

2011 39,258

ANNUALREPORT

2011

118



Investment properties under development Investment properties available for rent/sale

yrotcaFdnaldnadnaLnoitcurtsnoCdnaldnadnaL

improvement in progress Total improvement Building Total Grand total

Cost

1 January 2010 1,146,241 216,733 1,362,974 456,944 823,205 1,280,149 2,643,123

981,043---981,043717,632274,301esahcruP

)658,17()654,32()675,41()088,8()004,84(-)004,84(lasopsiD

Transfer in/out (141,883) (273,055) (414,938) (183,817) (254,183) (438,000) (852,938)

-tseretnidesilatipaC 1,216 1,216 - - - 1,216

31 December 2010 1,059,430 181,611 1,241,041 264,247 554,446 818,693 2,059,734

674,737---674,737251,636423,101esahcruP

)976,33(---)976,33(-)976,33(lasopsiD

Transfer in/out (302,383) (548,123) (850,506) (134,133) (323,162) (457,295) (1,307,801)

Capitalised interest 1,526 10,700 12,226 - - - 12,226

31 December 2011 826,218 280,340 1,106,558 130,114 231,284 361,398 1,467,956


228,69228,69228,69----0102yraunaJ1


Depreciation on disposal - - - - (2,213) (2,213) (2,213)

-tuo/nirefsnarT - - - (47,921) (47,921) (47,921)

399,97399,97399,97----0102rebmeceD13


-tuo/nirefsnarT - - - (57,904) (57,904) (57,904)

-1102rebmeceD13 - - - 43,772 43,772 43,772

Allowance for impairment loss

-------0102rebmeceD13

Increase during the year 15,420 - 15,420 - - - 15,420

31 December 2011 15,420 - 15,420 - - - 15,420

Net book value

31 December 2010 1,059,430 181,611 1,241,041 264,247 474,453 738,700 1,979,741

31 December 2011 810,798 280,340 1,091,138 130,114 187,512 317,626 1,408,764

Depreciation for the year (included in administrative expenses)

2010 33,305

2011 21,683

ANNUALREPORT

2011

119

The fair value of the investment properties as at 31 December 2011 and 2010 stated below:


Consolidated financial

statements

Separate financial

statements

2011 2010 2011 2010

Land and land improvement under

660,023,1499,079907,791,4430,244,5tnempoleved

Land and factory and warehouse

buildings available for rent/sale 895,954 2,795,399 581,998 1,409,512

The fair values of the above investment properties have been determined based on independent

valuer of associated companies in the same industrial area of the Company and subsidiaries’

factories/warehouses and land. The fair value of the land and land improvement under

development has been determined based on market prices, while that of the factory and

warehouse buildings available for rent/sale has been determined using the income approach. The

main assumptions used in the valuation are yield rate, vacancy rate and long-term growth in real

rental rates.

Investment properties under development and available for rent/sale and capitalised interest cost

were described as follow:

(Unit :Thousand Baht)

Consolidated financialstatements

Separate financialstatements

2011 2010 2011 2010Investment properties under development 4,121,932 3,011,668 1,091,138 1,241,041

Capitalised interest expensesfrom the part of loan fromfinancial institution and debentures 12,489 1,217 12,226 1,217

93.402.493.422.4)%(etarnoitasilatipaC

ANNUALREPORT

2011

120

Details of collateralised and uncollateralised investment properties of the Company and its

subsidiaries are provided below.

Investment properties under development and available for rent/sale of the Company and its

subsidiaries have been used as collateral for bank overdraft, short-term loans and long-term loans

from financial institutes.

15.2 Investment properties for rent



Land and Factory andland improvement warehouse building Total

Cost1 January 2010 1,413,037 3,009,793 4,422,830Purchase - 95 95Disposal (378,422) (684,283) (1,062,705)Transfer in/out 284,394 920,966 1,205,360

31 December 2010 1,319,009 3,246,571 4,565,580Disposal (165,313) (581,587) (746,900)Transfer in/out 897,766 2,504,483 3,402,249

31 December 2011 2,051,462 5,169,467 7,220,929




Type of assets 2011 2010 2011 2010Investment properties under collateralProperties under development 1,131,148 1,205,386 390,914 443,304Properties available for rent/sale, net 458,148 1,350,645 296,959 578,916

1,589,296 2,556,031 687,873 1,022,220Investment properties under non-collateralProperties under development 2,990,784 1,806,282 700,224 797,738Properties available for rent/sale, net 94,307 379,843 20,667 159,783

3,085,091 2,186,125 720,891 957,521Total 4,674,387 4,742,156 1,408,764 1,979,741

ANNUALREPORT

2011

121



Land and Factory andland improvement warehouse building Total

Accumulated depreciation1 January 2010 - 537,511 537,511Depreciation for the year - 170,368 170,368Depreciation on disposal - (137,534) (137,534)Transfer in/out - 74,181 74,181

31 December 2010 - 644,526 644,526Depreciation for the year - 228,121 228,121Depreciation on disposal - (80,825) (80,825)Transfer in/out - 113,644 113,644

31 December 2011 - 905,466 905,466

Net book value31 December 2010 1,319,009 2,602,045 3,921,054

31 December 2011 2,051,462 4,264,001 6,315,463

Depreciation for the year (included in cost of rental and related services,administrative expenses)

2010 170,368

2011 228,121



Land and landimprovement Factory building Total

Cost1 January 2010 1,226,851 2,231,165 3,458,016Disposal (378,422) (684,284) (1,062,706)Transfer in/out 325,700 529,331 855,031

31 December 2010 1,174,129 2,076,212 3,250,341Disposal (24,472) (48,867) (73,339)Transfer in/out 436,516 870,380 1,306,896

31 December 2011 1,586,173 2,897,725 4,483,898

ANNUALREPORT

2011

122



Land and land

improvement Factory building Total


1 January 2010 - 464,123 464,123

Depreciation for the year - 118,020 118,020

Depreciation on disposal - (137,534) (137,534)

Transfer in/out - 47,921 47,921

31 December 2010 - 492,530 492,530

Depreciation for the year - 121,252 121,252

Depreciation on disposal - (10,275) (10,275)

Transfer in/out - 57,904 57,904

31 December 2011 - 661,411 661,411

Net book value

31 December 2010 1,174,129 1,583,682 2,757,811

31 December 2011 1,586,173 2,236,314 3,822,487

Depreciation for the year (included in cost of rental and related services,

administrative expenses)

2010 118,020

2011 121,252

The fair value of the investment properties as at 31 December 2011 and 2010 stated below:




2011 2010 2011 2010Land and land improvement withfactory and warehouse buildingsfor rent 11,991,324 8,011,289 7,769,486 5,980,062

The fair values of the above investment properties have been determined based on independent

valuer of associated companies in the same industrial area of the Company and subsidiaries’

factories/warehouses and land. The fair value of the land and land improvement has been

determined based on market prices, while that of the factory and warehouse buildings for rent has

been determined using the income approach. The main assumptions used in the valuation are yield

rate, vacancy rate and long-term growth in real rental rates.

ANNUALREPORT

2011

123

The Company and its subsidiaries have several operating lease agreements in respect of the lease

of land, factory buildings and warehouses. The terms of the agreements are generally between 6

months to 12 years. As at 31 December 2011, future minimum rental income to be generated under

these operating leases is as follows.


Consolidated


Separate


Less than 1 year 448 293

Details of collateralised and uncollateralised investment properties for rent of the Company and its

subsidiaries are provided below.



statements

Separate financial

statements

2011 2010 2011 2010

Investment properties for rent

- Under collateral, net 3,701,567 2,679,889 2,531,898 2,243,815

- Under non-collateral, net 2,613,896 1,241,165 1,290,589 513,996

Total 6,315,463 3,921,054 3,822,487 2,757,811

Investment properties for rent of the Company and its subsidiaries have been used as collateral for

bank overdrafts, short-term loans and long-term loans from financial institutions.

As at 31 December 2011, the book values of the leased assets which the lessees have the option

to buy are as follows (leased investment properties which the lessees have an option to buy

comprises land and factories or factories which the Company leases to its tenants under lease

agreements with an option to buy, with the selling prices of the land being determined based on fair

market value at the transaction date and the selling prices of the factories being determined based

on cost of construction plus a margin, minus depreciation from the agreement date to the date of

the transaction; inflation may also be taken into account):

ANNUALREPORT

2011

124

(Unit: Thousand Baht)Option starting in

2012 83,8502013 213,0752014 81,556

Total 378,481

During October to December 2011, flooding in Pra Nakorn Sri Ayutthaya and Pathumthani

provinces caused damage to 69 of the Company’s factories, with an area of approximately area

193,675 square meters, located in Rojana Industrial Park (Phases 1, 2), Bangpa-In Industrial

Estate, Hitech Industrial Estate and Navanakorn Industrial Promotion Zone, and 13 warehouses of

the subsidiary, TICON Logistics Park Company Limited, with an area of approximately area 71,624

square meters, located in Logistics Park Activities (Wangnoi) and Rojana Industrial Park (Phase

2). This is out of a total of 193 factories and warehouses, with an area of approximately 619,560

square meters. The Company has estimated the decrease in rental and related service income

from properties damaged during October to December 2011 as follows.

Location name

No. offactories/warehouses

Area(Squaremeters)

Decrease in rentaland service income(Million Baht)

1. Rojana Industrial Park (Phase 1,2) 36 107,375 44.42. Bangpa-In Industrial Estate 2 5,250 2.23. Hitech Industrial Estate 20 53,100 17.64. Navanakorn IndustrialPromotion Zone 11 27,950 10.2

5. Logistics Park Activities (Wangnoi) 10 53,300 19.56. Rojana Industrial Park (Phase 2) 3 18,324 6.8

Total 82 265,299 100.7

After the floods receded, in December 2011, the Company and its subsidiary surveyed the

damage, and carried out repairs to the factories and warehouses. These consisted of cleaning the

buildings and surrounding areas, painting, and repairing electrical systems in the buildings. The

Company and its subsidiary recorded repair costs amounting to Baht 4.6 million as expenses in

profit or loss in the year 2011. However, the Company and its subsidiary have insurance against

flood damage and for business interruption, and on 10 February 2012, received the first interim

payment from their insurer, amounting to Baht 32 million.

ANNUALREPORT

2011

125

16. PROPERTY, PLANT AND EQUIPMENT



Furniture,

Land and land Factory Equipment fixtures and

improvement building and tools office equipment Vehicles Total

Cost1 January 2010 17,401 37,725 50,162 32,282 18,457 156,027

Purchase - - 352 2,853 1,787 4,992

Disposal - - (146) (977) (702) (1,825)

Transfer in/out 507,483 (22) - - - 507,461

31 December 2010 524,884 37,703 50,368 34,158 19,542 666,655

Purchase - - 4,910 7,964 3,577 16,451

Disposal (451) (1,050) (4,592) (972) (4,129) (11,194)

Transfer in/out 39,918 12,051 2,084 - - 54,053

Translation adjustment - - - 79 116 195

31 December 2011 564,351 48,704 52,770 41,229 19,106 726,160

Accumulated depreciation1 January 2010 - 2,975 30,516 19,344 11,133 63,968

Depreciation for the year 17,308 1,889 2,804 5,782 2,605 30,388

Depreciation on disposal - - (145) (959) (550) (1,654)

Transfer in/out 3,456 - 5,646 - - 9,102

31 December 2010 20,764 4,864 38,821 24,167 13,188 101,804

Depreciation for the year 17,691 2,208 1,851 5,796 3,143 30,689

Depreciation on disposal - (204) (2,044) (922) (4,051) (7,221)

Transfer in/out - - 3,820 - - 3,820

Translation adjustment - - - 26 19 45

31 December 2011 38,455 6,868 42,448 29,067 12,299 129,137

Net book value31 December 2010 504,120 32,839 11,547 9,991 6,354 564,851

31 December 2011 525,896 41,836 10,322 12,162 6,807 597,023

Depreciation for the year2010 30,388

2011 30,689

ANNUALREPORT

2011

126



Furniture,

Equipment fixtures and

and tools office equipment Vehicles Total

Cost1 January 2010 20,452 25,488 17,242 63,182

Purchase 319 1,725 671 2,715

Disposal/write-off (146) (939) (701) (1,786)

31 December 2010 20,625 26,274 17,212 64,111

Purchase 3,810 4,836 3,577 12,223

Disposal/write-off (2,351) (2,186) (4,129) (8,666)

Transfer in/out 2,084 - - 2,084

31 December 2011 24,168 28,924 16,660 69,752

Accumulated depreciation1 January 2010 17,129 17,816 10,545 45,490

Depreciation for the year - 3,898 2,327 6,225

Depreciation on disposal/

write-off (146) (933) (550) (1,629)


31 December 2010 19,076 20,781 12,322 52,179

Depreciation for the year - 3,258 2,682 5,940

Depreciation on disposal/

write-off (266) (2,035) (4,051) (6,352)


31 December 2011 19,989 22,004 10,953 52,946

Net book value31 December 2010 1,549 5,493 4,890 11,932

31 December 2011 4,179 6,920 5,707 16,806

Depreciation for the year (included in administrative expenses)2010 6,225

2011 5,940

As at 31 December 2011, certain equipment items have been fully depreciated but are still in use.

The gross carrying amount (before deducting accumulated depreciation) of those assets amounted

to Baht 47 million (2010: Baht 29 million) (The Company only: Baht 34 million, 2010: Baht 28

million).

As at 31 December 2011, the subsidiary’s land, land improvement and building with a net book

value of Baht 395 million (2010: Baht 409 million) have been used as collateral for bank overdrafts,

short-term loans and long-term loans from financial institutions.

ANNUALREPORT

2011

127

17. COMPUTER SOFTWARE


Consolidatedfinancial

statements

Separatefinancial

statements

Cost101,71324,020102rebmeceD13tasaecnalaB784,2949,2raeyehtgnirudnoitisiuqcA

-raeyehtgnirudslasopsiD (40)

273,321102rebmeceD13tasaecnalaB 19,548

Accumulated depreciation951,6805,70102rebmeceD13tasaecnalaB292,4611,5raeyehtrofnoitasitromA

-raeyehtgnirudffo-etirW (2)

426,211102rebmeceD13tasaecnalaB 10,449

Net book valueBalance as at 31 December 2010 12,915 10,942

Balance as at 31 December 2011 10,748 9,099

18. SHORT-TERM LOANS AND LIABILITIES UNDER TRUST RECEIPTS


Consolidated Separate

Interest rate financial statements financial statements

(percent per annum) 2011 2010 2011 2010

Short-term loans 3.49 - 5.50 1,602,500 - 1,516,500 -

Liabilities under trust receipts - 3,596 1,716 3,596 1,716

Total 1,606,096 1,716 1,520,096 1,716

As at 31 December 2011, the Company had overdraft lines and short-term loan credit facilities

totaling Baht 65 million (2010: Baht 100 million).

ANNUALREPORT

2011

128

As at 31 December 2011, parts of the Company’s and its subsidiaries’ investment properties under

development and available for rent/sale, investment properties for rent with a net book value of

Baht 88 million (2010: Baht 101 million) and certain of the Company’s investment units in TICON

Property Fund with a value under the equity method amounting to Baht 685 million (2010: Baht 81

million) have been pledged as collateral for liabilities under trust receipts, bank overdrafts and

short-term loans from financial institutions.

19. TRADE AND OTHER PAYABLES



statements

2011 2010 2011 2010Trade payables - unrelated parties 249,381 112,924 77,909 43,672Other payables - related parties - 315 2,142 8,556Accrued interest expenses to

621241621241ytrapdetalerAccrued interest expenses to

813,14553,13813,14553,13seitrapdetalernuAccrued expenses - related parties 1,703 106 1,703 106Accrued expenses - unrelatedparties 46,752 41,276 28,742 34,778

Total trade and other payables 329,333 196,065 141,993 128,556

20. LONG-TERM LOANS

As at 31 December 2011, the long-term loan credit facilities of the Company and its subsidiary

which have not yet been drawn down amounted to Baht 559 million (2010: Baht 1,362 million).

As at 31 December 2011, most of the Company and its subsidiary’s investment properties under

development and available for rent/sale, investment properties for rent and its subsidiary’s land and

building with a net book value of Baht 3,749 million (2010: Baht 3,768 million) have been pledged

as collateral for aforesaid long-term loans. In addition, as at 31 December 2011, its subsidiary’s

credit facilities from financial institution amounting to Baht 2,961 million (2010: Baht 2,961 million)

are guaranteed by the Company.

The loan agreements contain covenants as specified in the agreements that, among other things,

require the Company and its subsidiary to maintain certain debt to equity ratios according to the

agreements.

ANNUALREPORT

2011

129

21. DEBENTURES

The Company issued 6.15 million unsubordinated, and unsecured debentures. The debentures,

which have a face value of Baht 1,000 each, were sold at an offer price of Baht 1,000 per unit, or

for a total of Baht 6,150 million. Significant details of the debentures are summarised below.

No. Issued date No. of debentures Amount Coupon rate Tenure Maturity date

(Million units) (Million Baht) (% p.a.)

1/2009 19 August 2009 0.65 650 4.550% 3 years 19 August 2012

2/2009 28 September 2009 0.20 200 4.300% 3 years 2 October 2012

3/2009 19 November 2009 1.00 1,000 4.300% 3.5 years 19 May 2013

1/2010 12 February 2010 0.55 550 3.400% 3 years 12 February 2013

1/2010 12 February 2010 0.25 250 4.280% 5 years 12 February 2015

2/2010 5 July 2010 0.50 500 3.100% 3 years 5 July 2013

3/2010 3 September 2010 0.30 300 3.350% 3 years 3 September 2013




1/2011 20 May 2011 0.65 650 4.230% 5 years 20 May 2016

2/2011 8 July 2011 0.35 350 4.780% 7 years 8 July 2018

3/2011 28 December 2011 0.65 650 4.500% 5 years 28 December 2016

4/2011 30 December 2011 0.35 350 4.500% 5 years 30 December 2016

6.15 6,150

As at 30 December 2011, the Company has issued debenture No. 4/2011 amounting 0.35 million

units totaling Baht 350 million with interest rate at 4.5 per annum, 5 years maturity. There will be

dued to Bangkok Bank Public Company Limited on 30 December 2016.

The debentures impose certain restrictions on the Company relating to, among other things, the

maintenance of certain debt to equity ratios.


Consolidated financial statements /


2011 2010

Debentures 6,150,000 5,150,000

Less: Current portion (850,000) (1,000,000)

Debentures - net of current portion 5,300,000 4,150,000

ANNUALREPORT

2011

130

Movements in the debentures account during the year ended 31 December 2011 are summarised

below.


Consolidated financialstatements / Separatefinancial statements

Balance - beginning of year 5,150,000Add: Issuance of debentures during the year 2,000,000Less: Redemption during the year (1,000,000)

Balance - end of year 6,150,000

22. PROVISION FOR LONG-TERM EMPLOYEE BENEFITS

Provision for long-term employee benefits as at 31 December 2011, which is compensations on

employees’ retirement, was as follows:



statements

Separate financial

statements

Cumulative effect of change in accounting policy for

employee benefits adjusted against beginning

balance of retained earnings (Note 5) 16,401 14,081

Current service cost 1,877 1,523

Interest cost 656 563

Balance at end of year 18,934 16,167

Long-term employee benefit expenses included in the profit or loss for the year ended 31

December 2011 amounted to Baht 3 million.

Principal actuarial assumptions at the valuation date were as follows:


2011 2010 2011 2010(% per annum) (% per annum) (% per annum) (% per annum)

Discount rate 4.0 4.0 4.0 4.0Future salary increase rate 3.5 - 5.0 3.5 - 5.0 3.5 - 5.0 3.5 - 5.0Staff turnover rate- Head office- Site

0.0 - 18.035.0 - 50.0

0.0 - 18.035.0 - 50.0

0.0 - 18.035.0 - 50.0

0.0 - 18.035.0 - 50.0

ANNUALREPORT

2011

131

23. SHARE CAPITAL

23.1 Registered share capital

The extraordinary meeting of the shareholders No. 1/2011 held on 23 June 2011 approved the

following resolutions:

a) Issue up to 80,000,000 units of Taiwan Depository Receipts (TDRs) or the right of the

shares of the Company to be offered to the public in the Republic of China (Taiwan),

and appoint the Board of Directors and /or the Director and/or Managing Director and/or

an authorized representative, to establish regulations, conditions and detail related to

the offer of these Taiwan Depositary Receipts (TDRs).

b) Increase the registered share capital of the Company from Baht 1,037,252,920 to Baht

1,117,252,920, through the issue of 80,000,000 shares with a par value of Baht 1 each,

totaling Baht 80,000,000, to be reserved to support the offering of TDRs.

The Company registered the increase of its capital with the Ministry of Commerce on 7 July 2011.

23.2 Reconciliation of share capital which issued and paid-up

Premium

Number Paid-up on ordinary Registration

Description of shares share capital shares date

(Thousand shares) (Thousand Baht) (Thousand Baht)

Issued and paid-up ordinary share

The beginning of the year -

509,758,2643,686643,6860102rebmeceD13

Increase due to exercise of warrants:

No. 4/2010

1102yraunaJ6632,29253,31253,314W-NOCIT

No. 1/2011

1102lirpA4408,274344,86344,864W-NOCIT

No. 2/2011

468,214W-NOCIT 12,864 87,144 26 May 2011

The end of year - 31 December 2011 781,005 781,005 3,510,089

ANNUALREPORT

2011

132

24. WARRANTS

Details of the warrants of the Company which were issued without charge are as follows:

As of issued date

Number of Exercise Exercise

Issuance date warrant Period of price ratio per The exercise

Warrant Issued to of warrant issued warrant per share 1 warrant period Exercise date

TICON-W3 Ordinary shares 3 February 219,353,636 5 years 20.000 1.00000 31 March 2010 - Exercise on the last

2009 31 January 2014 business day of

each quarter

TICON-W4 Ordinary shares 22 May 2009 109,677,073 2 years 8.000 1.00000 30 June 2009 - Exercise on the last

20 May 2011 business day of

each quarter

TICON-W5 Directors and 14 May 2009 32,883,000 5 years 8.000 1.00000 29 June 2012 - Exercise on the last

Employees 13 May 2014 business day of

each quarter

Total 361,913,709

The Company readjusted the exercise price and ratio of its warrants as follows: -

Exercise price Exercise ratio

Date Warrant per share per 1 warrant Effective date

4 May 2010 TICON-W3 Baht 19.688 1.01583 ordinary shares 30 June 2010



28 April 2011 TICON-W3 Baht 19.355 1.03331 ordinary shares 30 June 2011

28 April 2011 TICON-W4 Baht 7.774 1.02905 ordinary shares 20 May 2011

28 April 2011 TICON-W5 Baht 7.774 1.02905 ordinary shares 29 June 2012

Movements of warrants of the Company during the year are as follows: -

Number of warrants Number of Number of Number of warrants

outstanding as at warrants exercised warrants cancelled outstanding as at

Warrant 31 December 2010 during the year during the year 31 December 2011

TICON-W3 219,349,803 - - 219,349,803

TICON-W4 80,298,522 (80,157,056) (141,466)* -

TICON-W5 32,883,000 - - 32,883,000

Total 332,531,325 (80,157,056) (141,466) 252,232,803

* No longer been listed securities since 21 May 2011.

ANNUALREPORT

2011

133

25. STATUTORY RESERVE

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required

to set aside a statutory reserve at least 5 percent of its net income after deducting accumulated

deficit brought forward (if any), until the reserve reaches 10 percent of the registered share capital.

The statutory reserve is not available for dividend distribution.

26. EXPENSES BY NATURE

Significant expenses by nature are as follows:


Consolidated


Separate


2011 2010 2011 2010

Salary and wages and other employee

165,49737,98544,211735,711stifeneb

Depreciation and amortisation 303,188 265,173 153,167 161,023

Rental expense from operating lease

865,52118,62304,33211,73stnemeerga

Allowance for impairment loss on

investment properties under

-024,51-024,51tnempoleved

27. CORPORATE INCOME TAX AND DEFERRED TAX ASSETS / LIABILITIES

Income tax expenses for the years ended 31 December 2011 and 2010 are made up as follows:


Consolidated


Separate


2011 2010 2011 2010

Current income tax:

Current income tax charge 137,535 307,373 81,524 300,751

Deferred tax:

Relating to origination and reversal of

469,3943)544,94()634,01(secnereffidyraropmet

Effects of changes in the applicable tax rates 71,994 - 95 -

Income tax as included in income

statements 199,093 257,928 81,968 304,715

ANNUALREPORT

2011

134

Reconciliation between tax expense and the product of accounting profit multiplied by the

applicable tax rate for the years ended 31 December 2011 and 2010 is as follows:


Consolidated


Separate


2011 2010 2011 2010

Accounting profit before income tax 635,485 1,079,027 523,067 1,292,637

Applicable tax rate:

tsrifehtrof%52%03tsrifehtrof%52%03ynapmoCehT

amounted Baht 300

million of profit of

the

amounted Baht

300 million of

profit of the

dnaynapmoC%03dnaynapmoC

30%

--%03%03seiraidisbuS

Accounting profit before tax multiplied

197,273029,651104,903646,091etarxatelbacilppayb

Effects of changes in the applicable

-59-499,17setarxat

Effects of:

--)181,21()127,64()82etoN(segelivirplanoitomorP

Dividend income from subsidiary

)267,66()413,97(--setaicossadna

Non-deductible expenses and

)413,1(762,4)292,93()628,61(emocni

)745,36(latoT (51,473) (75,047) (68,076)

Income tax expenses reported in

income statement 199,093 257,928 81,968 304,715

ANNUALREPORT

2011

135

As of 31 December 2011 and 2010, the components of deferred tax assets and deferred tax

liabilities are as follows:




2011 2010 2011 2010Deferred tax assetsUnrealised gain on sales ofproperties to associates 192,426 254,865 - -

Unearned income from constructionservices 427 738 427 738

Provision for long-term employeebenefits 3,787 - 3,234 -

Allowance for doubtful account 1,051 1,286 1,051 1,286Allowance for impairment loss oninvestment properties underdevelopment 3,084 - 3,084 -

Prepaid income 1,351 1,569 1,351 1,569

Total 202,126 258,458 9,147 3,593

Deferred tax liabilitiesOperating leases receivables 7,436 7,130 7,058 5,284

Total 7,436 7,130 7,058 5,284

In October 2011, the cabinet passed a resolution to reduce the corporate income tax rate from 30

percent to 23 percent in 2012, and then to 20 percent from 2013. In addition, in order to comply

with the resolution of the cabinet, in December 2011, the decreases in tax rates for 2012 - 2014

were enacted through a royal decree. The Company reflected the changes in tax rates in its

deferred tax calculation, as presented above.

ANNUALREPORT

2011

136

28. PROMOTIONAL PRIVILEGES

Two subsidiaries have been granted promotional privileges under the provisions of the Industrial

Investment Promotion Act that subject to certain imposed conditions as follows:

Period Period of

Date of first of corporate 50% reduction

earning operating income tax of corporate

Company Certificate No. income exemption income tax Promotional activities

ECO Industrial Services 1720(1)/2544 20 December 2001 8 years 5 years Development of real estate

Company Limited for factories

TICON Logistics Park 2142(2)/2550 1 July 2007 8 years - Logistics park activities

Company Limited (Bangna-trad)

1766(2)/2551 1 July 2008 8 years - Logistics park activities

(Wangnoi)

1648(2)/2553 1 August 2010 7 years - Building development for

factory and/or warehouse

(Rojana)

2529(2)/2554 26 October 2011 7 years - Building development for

factory and/or warehouse

(Amata Nakorn)

The subsidiaries’ operating revenues for the years ended on 31 December 2011 and 2010 are

below divided according to promoted and non-promoted operations.


Promoted Non-promoted Total

2011 2010 2011 2010 2011 2010

Rental and service income 246,017 141,842 64,586 51,971 310,603 193,813

Revenues from construction

923245923245--secivres

Sales of properties to

related parties 343,500 - 600,000 - 943,500 -

Utility income 1,170 949 9,237 6,944 10,407 7,893

Management fee income

from related companies - - 2,663 2,355 2,663 2,355

Interest income 428 80 468 32 896 112

76emocnirehtO 80 980 1,934 1,047 2,014

Total 591,182 142,951 678,476 63,565 1,269,658 206,516

ANNUALREPORT

2011

137

29. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing profit for the year attributable to equity holders of

the Company (excluding other comprehensive income) by the weighted average number of

ordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing profit for the year attributable to equity holders

of the Company (excluding other comprehensive income) by the weighted average number of

ordinary shares in issue during the year plus the weighted average number of ordinary shares

which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares.

The calculation assumes that the conversion took place either at the beginning of the year or on

the date the potential ordinary shares were issued.

The following table sets forth the computation of basic and diluted earnings per share:


Weighted average

Profit for the year number of ordinary shares Earnings per share

2011 2010 2011 2010 2011 2010

(Thousand

Baht)

(Thousand

Baht)

(Thousand

shares)

(Thousand

shares)

(Baht) (Baht)

Basic earnings per share

Profit attributable to equity holders

of the parent 436,393 821,099 759,417 674,290 0.57 1.22

Effect of dilutive potential ordinary shares

Warrants

TICON-W2 - - - 382

TICON-W4 - - 8,285 30,988

TICON-W5 - - 13,098 9,794

Diluted earnings per share

Profit of ordinary shareholders assuming

the conversion of warrants to ordinary shares 436,393 821,099 780,800 715,454 0.56 1.15


Weighted average

Profit for the year number of ordinary shares Earnings per share

2011 2010 2011 2010 2011 2010

(Thousand

Baht)

(Thousand

Baht)

(Thousand

shares)

(Thousand

shares)

(Baht) (Baht)

Basic earnings per share

Profit attributable to equity holders

of the parent 441,098 987,923 759,417 674,290 0.58 1.47

Effect of dilutive potential ordinary shares

Warrants

TICON-W2 - - - 382

TICON-W4 - - 8,285 30,988

TICON-W5 - - 13,098 9,794

Diluted earnings per share

Profit of ordinary shareholders assuming

the conversion of warrants to ordinary shares 441,098 987,923 780,800 715,454 0.56 1.38

ANNUALREPORT

2011

138

The warrants allocated to the existing shareholders of the Company (TICON-W3) for the years

ended 31 December 2011 and 2010 were not included in the calculation of diluted earnings per

share since the exercise price of the warrants exceeds the average fair value of the Company’s

ordinary shares.

30. SEGMENT INFORMATION

The Company and its subsidiaries’ main business is real estate development, which comprises the

development of factories and warehouses, mainly for rent and occasionally for sale and the

provision of construction services. These operations are mainly carried on in Thailand.

Below is the consolidated financial information of the Company and its subsidiaries for the years

ended 31 December 2011 and 2010 by segment.(Unit: Million Baht)

Real estate Construction servicebusiness business Total

2011 2010 2011 2010 2011 2010Revenues 1,977 2,762 22 21 1,999 2,783

Segment income 1,008 1,496 3 5 1,011 1,501Unallocated income and expenses:Other income 132 150Selling expenses (19) (14)Administrative expenses (214) (189)Depreciation (93) (92)Other expenses (16) (5)Share of income from investmentsin associates 101 (11)

Finance cost (267) (261)Corporate income tax (199) (258)

Profit for the year 436 821

Information in the consolidated the statements of financial position is presented by real estate (for

sales/rent) and other segments as at 31 December 2011 and 2010 as follows:


Real estatebusiness Others Total

2011 2010 2011 2010 2011 2010Investment properties under developmentand available for rent/sale 4,674 4,742 - - 4,674 4,742

Investment properties for rent 6,316 3,921 - - 6,316 3,921Property, plant and equipment 597 565 - - 597 565Other assets - - 3,702 3,257 3,702 3,257

Total assets 15,289 12,485

The Company and its subsidiaries have applied the transfer prices as described in Note 8 to the

financial statements.

ANNUALREPORT

2011

139

31. PROVIDENT FUND

The Company, its subsidiary and their employees have jointly established a provident fund. The

fund is contributed to by both employees and the Company and its subsidiary at the rates of 2 - 4

percent of wages. The fund was managed by Bank Ayudhya Public Company Limited. During the

year 2011, the Company and its subsidiary contributed Baht 3 million (2010: Baht 2 million) to the

fund.

32. DIVIDEND

Dividends Approved by Total dividends Dividend per share

(Thousand Baht) (Baht)

Dividend from the operating Board of Directors No. 5/2011

results of the first half of the on 10 August 2011

2.0102,6511102raey

Dividend from the operating Annual General Meeting of the

results of the year 2010 shareholders on 25 April 2011 768,136 1.0

Total dividend for the year 2011 924,337 1.2

Dividend from the operating Annual General Meeting of the

results of the year 2009 shareholders on 23 April 2010 537,723 0.8

Total dividend for the year 2010 537,723 0.8

33. COMMITMENTS AND CONTINGENT LIABILITIES

33.1 Long-term lease agreements

a) The Company and its subsidiaries have commitments in respect of six contracts made

with “Industrial Estate Authority of Thailand” to rent land for the construction of standard

factories for rent. These lease agreements can not be cancelled and are summarised as

follows.

Contract No. Contract period Fees

21/2538-Ngor Chor 13 December 1995 - 12 December 2025 Baht 4.70 million per annum (a)

14/2540-Ngor Chor 14 November 1997 - 13 November 2027 Baht 0.66 million per annum (a)

8/2542-Ngor Chor 18 August 1999 - 17 August 2029 Baht 2.21 million per annum (a)

Ngor Chor.Kor 002/2548 25 January 2005 - 31 December 2018 Baht 0.75 million per annum (b)

Ngor Chor. 005/2549 25 April 2006 - 31 December 2018 Baht 2.08 million per annum (b)

(a) This amount be raised every ten years by an amount which does not exceed 10 percent of the previous

rental fee

(b) This amount be raised every five years by an amount which does not exceed 10 percent of the

previous rental fee

ANNUALREPORT

2011

140

b) The Company has commitments in respect of office rental and related service

agreements made with a related company, with rental and service fees charged at a

rate of Baht 14-15 million per annum. These lease agreements can not be cancelled

and covers a 3-year period as from July 2009 to June 2012.

As at 31 December 2011, the Company and its subsidiaries have future minimum lease payments

required under these non-cancellable operating leases contracts as follows.


Payable within:Consolidated

financial statementsSeparate


Less than 1 year 26 181 to 5 years 75 47More than 5 years 106 92

33.2 Capital commitments




2011 2010 2011 2010Agreements to purchase land forconstruction of future warehouses 816 249 320 -

Agreements with contractors 1,141 290 27 40Agreements for landfill 4 - - -Agreements for repairment offactories 23 - 19 -

Total 1,984 539 366 40

33.3 Bank guarantees

(a) The Company has guaranteed bank guarantee facilities of its subsidiaries amounting to

Baht 116 million.

(b) As at 31 December 2011, there were outstanding bank guarantees issued by the bank

on behalf of the Company and its subsidiaries in respect of certain performance bonds

as required in the business of the Company are categorised by purpose as follows:

ANNUALREPORT

2011

141

(Unit: Million Baht)Consolidated Separate

Purpose of Guarantees financial statements financial statements

Long-term land lease agreements 35 24Utilities for construction projects 11 4Retention for construction projects 35 -Operation for construction projects 11 7

Total 92 35

33.4 Servitude over property

As at 31 December 2011, the Company and its subsidiary have servitude over land of

approximately 86 rai (2010: 82 rai) (The company only: 57 rai, 2010: 53 rai) of which the net

book value is Baht 173 Million (2010: Baht 167 million) (The company only: Baht 139 million,

2010: Baht 132 million) and is presented under investment properties for rent and property,

plant and equipment.

33.5 Guarantee of lease and service incomes

The Company as the property manager of TPARK Logistics Property Fund (“the Fund”) has

guaranteed the minimum rental and service incomes net of common area service fees of

Baht 188 million per annum for the vacant warehouses for the period from 1 January 2012 to

31 December 2016. In the event that the total rental and service incomes net of common

area service fees of the vacant warehouses are less than the above guaranteed amounts,

the Company is obliged to pay the shortfall amounts to the Fund.

As at 31 December 2011, 22 million of the Company’s investment units in TPARK Logistics

Property Fund (2010: 15 million units), with a value under the equity method of Baht 160

million (2010: Baht 104 million), are pledged with a bank as collateral for this guarantee.

33.6 Investment commitment

As at 31 December 2011, the Company is committed to pay uncalled portions of its

investment in a subsidiary, approximately of USD 1 million (2010: USD 2 million).

ANNUALREPORT

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142

34. FINANCIAL INSTRUMENTS

34.1 Financial risk management

The Company’s financial instruments, as defined under Thai Accounting Standard No. 107

“Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash

equivalents, current investments, trade and other receivable, unbilled operating leases

receivables, loans to, investments, short-term loans, long-term loans and debentures. The

financial risk associated with these financial instruments and how they are managed is

described below.

Credit risk

The Company and its subsidiaries are exposed to credit risk primarily from trade with

counterparties involving the rental/sale of factories, warehouses and construction services.

However, due to the large number and diversity of entities comprising the customer base,

and their business conduct policy, the Company and its subsidiaries do not anticipate

material losses from its debt collection. The maximum exposure to credit risk is limited to the

carrying amounts of receivables as stated in the statements of financial position.

Interest rate risk

The Company and subsidiaries’ exposure to interest rate risk relates primarily to its cash at

banks, bank overdrafts, long-term borrowings and debentures. However, since most of the

Company and subsidiaries’ financial assets and liabilities bear floating interest rates or fixed

rates which are close to the market rate, the interest rate risk is expected to be minimal.

Significant financial assets and liabilities as at 31 December 2011 classified by type of

interest rates are summarised in the table below, with those financial assets and liabilities

that carry fixed interest rates further classified based on the maturity date, or the repricing

date if this occurs before the maturity date.

ANNUALREPORT

2011

143

Consolidated financial statements as at 31 December 2011

Fixed interest rates

egarevAtseretni-noNgnitaolFrevOnihtiW

1 year 1-5 years 5 years interest rate bearing Total interest rate

).a.p%()thaBnoilliM(

Financial assets95.2,18.0780,11531--159tnelaviuqehsacdnahsaC

-9494----elbaviecerrehtodnaedarT

Deposits at financial institutions

78.114-14---snoitcirtserhtiw

Unbilled operating leases receivables - - - - 76 76 -

951 - - 176 126 1,253

Financial liabilitiesShort-term loans and liabilities

68.3606,14---206,1stpiecertsurtrednu

-923923----elbayaprehtodnaedarT

50.4051,6---051,6-serutnebeD

Long-term loans from related party - 865 - 136 - 1,001 5.89

1,602 7,015 - 136 333 9,086

Foreign currency risk

The Company and subsidiaries’ exposure to foreign currency risk arises mainly from

purchasing transactions that are denominated in foreign currencies. The Company and

subsidiaries seeks to reduce this risk by entering into forward exchange contracts when it

considers appropriate. Generally, the forward contracts mature within one year.

Separate financial statements as at 31 December 2011

Fixed interest rates

Within Over Floating Non- interest Average

1 year 1-5 years 5 years interest rate bearing Total interest rate

).a.p%()thaBnoilliM(

Financial assets95.2,18.0610,1-56--159tnelaviuqehsacdnahsaC

-4343----elbaviecerrehtodnaedarT

Unbilled operating leases receivables - - - - 31 31 -

Long-term loans to related company - 3,141 - - - 3,141 4.35

951 3,141 - 65 65 4,222

Financial liabilitiesShort-term loans and liabilities

68.3025,14---615,1stpiecertsurtrednu

-241241----elbayaprehtodnaedarT

50.4051,6---051,6-serutnebeD

Long-term loans from related party - 865 - 136 - 1,001 5.89

1,516 7,015 - 136 146 8,813

ANNUALREPORT

2011

144

The balances of financial liabilities denominated in foreign currencies as at 31 December

2011 are summarised below.

Exchange rate

Foreign currency Financial liabilities as at 31 December 2011

(Million) (Baht per 1 foreign currency unit)

9138.131.0rallodSU

34.2 Fair values of financial instruments

Since the majority of the Company and subsidiaries’ financial assets and liabilities are short-

term in nature or bear floating interest rates, their fair value is not expected to be materially

different from the amounts presented in the statements of financial position.

A fair value is the amount for which an asset can be exchanged or a liability settled between

knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by

reference to the market price of the financial instrument or by using an appropriate valuation

technique, depending on the nature of the instrument.

35. CAPITAL MANAGEMENT

The primary objective of the Company’s capital management is to ensure that it has appropriate

capital structure in order to support its business and maximise shareholder value. As at 31

December 2011, the Group's debt-to-equity ratio was 1.7:1 (2010: 1.2:1) and the Company's was

1.5:1 (2010: 1.1:1).

36. EVENTS AFTER THE REPORTING PERIOD

36.1 On 28 February 2012, the Board of Directors’ Meeting No. 1/2012 of the Company resolved

the resolution to pay dividend of Baht 0.2 per share from the second half earnings of the

year 2011, on 17 May 2012. The resolution is subject to approval of the Company’s Annual

General Meeting of Shareholders to be held on 25 April 2012.

36.2 During January 2012, the Company issued 0.9 million unsubordinated, unsecured

debentures, and with no debentureholder representation. The debentures, which have a

face value of Baht 1,000 each, were sold at an offer price of Baht 1,000 per unit, or for a

total of Baht 900 million. Significant details of the debentures are summarised below.

ANNUALREPORT

2011

145

No. Issued date No. of debentures Amount Coupon rate Tenure Maturity date

(Million units) (Million Baht) (% p.a.)

1/2012 10 January 2012 0.10 100 4.500% 5 years 10 January 2017

2/2012 20 January 2012 0.80 800 4.000% 2 years 20 January 2014

0.90 900

36.3 On 14 February 2012, TICON Property Fund (“the Fund”) announced that it had approved

the issue and offer for sale of 74 million additional investment units at a price of Baht 10.25

per unit to the existing unitholders, in accordance with the resolution passed by the Meeting

No.1/2011 of the Fund’s Unitholders, on 4 August 2011. This issue and offering of

additional investment units is made in order to fund the acquisition of 11 factories that were

not affected by the floods from the Company (out of the 26 factories approved by the

meeting of the Fund’s unitholders).

36.4 On 17 February 2012, The Company sold investment units in TICON Property Fund (“the

Fund”) of 5 million units at a price of Baht 10.6 per unit, or a total of Baht 53 million. As a

result, the Company's percentage of shareholding in the Fund has decreased from 28.02

percent to 27.59 percent of the units of the Fund.

36.5 On 17 February 2012, The Company sold investment units in TPARK Logistics Property

Fund (“the Fund”) of 1 million units at a price of Baht 11.3 per unit, or a total of Baht 11

million. As a result, the Company's percentage of shareholding in the Fund has decreased

from 20.43 percent to 20.18 percent of the units of the Fund.

37. RECLASSIFICATION

To comply with the Notification of the Department of Business Development relating to the financial

statement presentation as described in Note 2, as the result of the adoption of revised and new

accounting standards as described in Note 3 and the Company’s financial policy, certain amounts

in the financial statements for the year ended 31 December 2010 have been reclassified to

conform to the current year’s classification, without any effect to the previously reported profit or

shareholders’ equity. The reclassifications are as follows:

ANNUALREPORT

2011

146



As previously As previously

As reclassified reported As reclassified reported

Statement of financial position as at

31 December 2010

Assets

Trade accounts receivable, net - 13,695 - 10,655

Current portion of operating leases

receivables - 12,787 - 8,314

Unbilled of work in progress under

construction contracts - 191 - 189

Other receivables-related parties - 14,396 - 109,791

Trade and other receivables 41,592 - 130,923 -

Short-term loans to and accrued interest

from subsidiary - - - 1,398,766



As previously As previously

As reclassified reported As reclassified reported

Other current assets 45,970 51,574 27,670 27,973

Long-term loans to related company - - 1,397,095 -

Deposit for purchase property 5,081 - - -

Liabilities

Trade accounts payable - 112,925 - 43,672

Other payable-related party - 315 - 8,556

Trade and other payables 196,065 - 128,557 -

Other current liabilities 14,375 97,200 13,371 89,700

Income statements for the year ended

31 December 2010

Administrative expenses 190,041 148,109 156,264 114,962

Depreciation and amortization expenses - 94,805 - 43,003

Depreciation 90,912 - 39,530 -

Management benefit expenses - 38,039 - 37,829

38. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were authorised for issue by the Company’s Board of Directors on 28

February 2012.

ANNUALREPORT

2011

147

CERTIFICATION OF THE ACCURACY OF AUDITOR’S REMUNERATION DETAILSFOR THE FISCAL YEAR ENDED 31 DECEMBER 2011

Audit fee

No. Company’s name Auditor’s name Audit fee (Baht)

1TICON Industrial ConnectionPublic Company Limited andits subsidiaries

Ernst & Young Office Limited(By Ms.Rungnapa Lertsuwankul)

1,400,000

Total Audit fee 1,400,000

Non-audit Fee

No. Company’s name Non-audit service Service provider

(Non-audit fee) (Baht)

Amountpaid in theyear

Amount tobe paidlater

1TICON IndustrialConnection PublicCompany Limited

Review significantdifferences betweenaccounting principlesgenerally accepted inThailand andInternational FinancialReporting Standards

Ernst & YoungOffice Limited - 230,000

2TICON IndustrialConnection PublicCompany Limited

Audit work papersreview fee

Ernst & YoungOffice Limited - 175,000

Total Non-audit fee - 405,000

The foregoing information:

� is complete and accurate, and I certify that to the best of my knowledge there is no otherremuneration paid by the Company to me and related persons and to the company I workfor and its related persons.

� is not complete and not accurate in respect of ……………...…………………………………………

After making any necessary adjustments to the information contained in this form, I herebycertify that such information presents complete and accurate details of all Audit fees andNon-Audit fees paid by the Company to me and the audit firm that I work for.

(Ms. Rungnapa Lertsuwankul)

Ernst & Young Office Limited

Auditor of TICON Industrial Connection Public Company Limited

3

ANNUALREPORT

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ticon: annual report 2011

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